Ask HN: If you deposit cash into a bank, do they get two copies of the money?
This may sound silly but it's a serious question!
When I deposit cash into a bank they instantly turn it into a number in their database which can be transmitted electronically to other accounts with no need for them to touch the cash that I deposited.
Yet, they also have a copy of the cash that can be used in any way they like.
I get, that in a few cases I might withdraw that same cash, and it will deleted the digits I added to my account record and remove the cash from their system.
But, in the vast majority of cases I don't and they have the new numbers in their database and they also have new cash in their vaults.
In these cases, do they then have two copies of the same money?
All answers welcome!
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To expand a little, they take the cash and put it in the cash account. The cash account tracks the amount of real cash in possession. They then make a credit for that amount to your personal account, and a debit that amount from the cash account. I don't understand, when exactly, that corresponding debit happens.
Once it gets inserted in their database you can use it and transfer it electronically.
And they have your cash in hand.
But they have already paid the cash in Advance or have credit with other banks so the cash has been exchanged even before you add it.
Once you deposit the money they assign that amount to your account number.
So no, they don't have two copies of the same money, All the money as been paid upfront or is given to them on credit.
Well this is my understanding, I could be wrong.
Starting point:
You: Assets=$100, liabilities=$0
Bank: Assets=$0, liabilities=$0
You now deposit the money:
You: Assets=$100 (money they owe you), liabilities=$0
Bank: Assets=$100 (cash in vault), liabilities=$100 (money they owe you)
Which is to say, the number in their database is money they owe you, which cancels out the cash in their vault. So bank's net worth is still 0.