And also the necessary reserves for the deposit stay in their bank checking account (reserves acct) during the Fed.
A doesn’t have enough reserves in its account when the borrower makes the transfer, the bank borrows reserves from other banks, or in a worse case scenario, the Federal Reserve’s Discount Window which charges a penalty if the borrower decides to move the deposit to another bank (buying a house, for example), the reserves travel with the deposit to bank B. And if bank.
This is certainly key though” … a bank has to fund the created loans despite being able to produce cash, because it require main bank reserves to be in deals drawn regarding the build up they create”
“How it finances the loans hinges on general expenses associated with the various sources that are available.