This lending is profitable for banks, because they charge more interest on loans than they pay on deposits.15 The level of settlement cash or base money used to be a constraint on bank lending; there was a relationship between base money and broad money that could be explained by a money multiplier.16 Central banks at this time controlled the level of base money, and rules around base money holdings relative to broad money creation, in order to manage bank lending.
There is now no explicit prudential requirement to hold settlement cash or base money, and a range of liquid assets can be used to satisfy liquidity requirements.