Professor Patrick Honohan:

When the banks source their money from different sources they get it from depositors, the ordinary plain people. They get depositors from big companies but it is the money that companies need to use, and they get deposits from financial institutions and investment funds that are not needed on a day to day basis. They also get bonds which have equal standing with the deposits but they are required by international regulation not to rely wholly on this first tier of deposits and senior bonds. They are required to get some of their funding from risk-takers, especially equity holders, but also they are allowed to cover some of that requirement with bonds that explicitly state that they will not be paid in a liquidation until all the senior bonds are paid. They are an intermediate cushion of liabilities.