>Banks don’t lend out deposits Banks do lend out deposits, which is why when they fall below capital reserves as a result, they use the overnight lending facil

>Banks don’t lend out deposits Banks do lend out deposits, which is why when they fall below capital reserves as a result, they use the overnight lending facility of the Fed [1] (or similar processes in most countries) to maintain mandatory capital reserves. It leads to data like this [2] which shows the actual amount held by banks versus deposits. [1] https://www.newyorkfed.org/markets/reference-rates/obfr https://www.newyorkfed.org/markets/reference-rates/obfr [2] https://fred.stlouisfed.org/series/M14060USM156NNBR https://fred.stlouisfed.org/series/M14060USM156NNBR