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Credit intermediation – banks borrow and lend back-to-back on their own account as middle men. Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position A bank could also have substantial long-term assets (such as fixed-rate mortgages) but a shortage of short-term liabilities, such as deposits. This is sometimes called a maturity mismatch, which can be measured by the duration gap.