In Niall Ferguson's book "The Ascent of Money," he explains the financial structure of banks, highlighting the nature of their liabilities and assets. The liabilities of a bank include the deposits made by customers, on which banks typically pay interest, along with reserves that do not generate interest income. This combination reflects the obligations a bank has towards its depositors, who expect a return on their savings.

Conversely, banks classify their assets as the loans they extend to borrowers. These loans are crucial for generating income, as the bank collects interest on the money lent out. This fundamental relationship between deposits, reserves, and loans illustrates how banks operate within the financial system, balancing their need to maintain liquidity with the goal of profitability through interest collection.