That’s not actually how banks work at all. The amount a bank can lend isn’t at all linked to the amount of deposits it has - banks lever capital, not deposits.

That’s not actually how banks work at all. The amount a bank can lend isn’t at all linked to the amount of deposits it has - banks lever capital, not deposits. And they can lend more than 10x that - I think with the recent Basel III rules it’s 12.5x tier 1 capital, but back around the GFC when there was less regulation some banks were 30x. (The US does have a reserve requirement too but most countries don’t. There’s no real need when you have a central bank as a lender of last resort). To satisfy double-entry accounting rules, banks actually create deposits from loans, not the other way around. Deposits do help with liquidity for fulfilling interbank transfers (and rules now have liquidity requirements that deposits count towards), but as long as they are not insolvent the bank can also just borrow the reserves it needs from other banks or the central bank. See this explainer from the Bank of England (PDF warning) - https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf?la=en&hash=9A8788FD44A62D8BB927123544205CE476E01654 https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...