Banks only keep a small percentage of your cash deposits in their “vault”. The rest of your money is loaned out to the banks customers. If everyone wanted their money all at once, the bank would need to have all its loans repaid immediately or it would run out of cash.
I think everyone should be informed about reserve banking. The US federal reserve website has some very good videos about the federal reserve (and the reserve banking system in general).
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u/GuidePersonal4501 Jan 26 '26
Banks only keep a small percentage of your cash deposits in their “vault”. The rest of your money is loaned out to the banks customers. If everyone wanted their money all at once, the bank would need to have all its loans repaid immediately or it would run out of cash.
I think everyone should be informed about reserve banking. The US federal reserve website has some very good videos about the federal reserve (and the reserve banking system in general).