bank deposit

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June 18, 2026

Quick Summary

A bank deposit refers to any funds credited to a depositor's account by a bank. These deposits, along with currency, are considered part of the money holdings of the public.12

Bank deposits are not held for safekeeping in a vault; instead, banks lend out most of the deposited funds or use them to purchase investments. Banks maintain reserves of cash and deposits at the central bank as assets, while customer deposits represent liabilities. The growth of deposits allows the total money supply to be larger than the physical currency available, as banks create money through lending.23

To protect depositors, deposit insurance guarantees against losses in case of bank failure. This system was developed in the United States during the Great Depression and is managed by entities like the Federal Deposit Insurance Corporation (FDIC). Certificates of Deposit (CDs) are a type of receipt from a bank acknowledging a deposit, with time CDs bearing interest and having a specific maturity date.45

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bank
Rationale for deposit insurance
…program intended to protect bank deposit holders from losses that could occur in the event of a bank failure. Although bank deposit insurance is primarily viewed as a means of protecting individual (and especially small) bank depositors, its more subtle purpose is one of protecting entire national banking and payments…
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…program intended to protect bank deposit holders from losses that could occur in the event of a bank failure. Although bank deposit insurance is primarily viewed as a means of protecting individual (and especially small) bank depositors, its more subtle purpose is one of protecting entire national banking and payments…
Read More

bank
Specialization
In every case deposit banking at first involved little more than the receipt of coins for safekeeping or warehousing, for which service depositors were required to pay a fee. By early modern times this warehousing function had given way in most cases to genuine intermediation, with deposits becoming…
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In every case deposit banking at first involved little more than the receipt of coins for safekeeping or warehousing, for which service depositors were required to pay a fee. By early modern times this warehousing function had given way in most cases to genuine intermediation, with deposits becoming…
Read More

money
Bank deposits
In addition to currency, bank deposits are counted as part of the money holdings of the public. In the 19th century most economists regarded only currency and coin, including gold and other metals, as “money.” They treated deposits as claims to money. As…
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In addition to currency, bank deposits are counted as part of the money holdings of the public. In the 19th century most economists regarded only currency and coin, including gold and other metals, as “money.” They treated deposits as claims to money. As…
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money market
Central banks
…market, are in fact mainly deposit balances that these commercial banks have on the books of the central bank or notes issued by the central bank, which the commercial banks keep in their own vaults. As the central bank acquires additional assets, it pays for them by crediting depositors’ accounts…
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…market, are in fact mainly deposit balances that these commercial banks have on the books of the central bank or notes issued by the central bank, which the commercial banks keep in their own vaults. As the central bank acquires additional assets, it pays for them by crediting depositors’ accounts…
Read More