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0 pointsandsoitis8mo ago0 comments

> When you "transfer money" from your bank account to another, your bank has to physically move the associated cash from it's vault to the other banks vault, by hiring secure trucks, people, and so on.

That’s not at all what happens!

Transfers are done digitally, physical cash does not move between vaults or bank branches.

0 comments

nytesky8mo ago

I remember being shocked at some point that my deposits at a bank would actually be a liability on their books not an asset. When you think about it as passing around debt, it makes a bit more sense.

baq8mo ago

The easier explanation is that your deposits are yours, not the bank’s. In terms of debt, they owe you. They make money by borrowing from you and lending long term debt to get more yield than they pay you on your cash (you may hear this called “borrow short to lend long”).

fragmede8mo ago

Since the invention of the computer, sure, but before that, yes they did at some point reconcile. Even today, cash still physically moves from the mint to banks to consumers.

andsoitisOP8mo ago

In the US, fewer than 18% of consumer transactions are made with cash, and it is declining.

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