The mortgage would end in a deposit during the bank issuing the mortgage.

Plus the necessary reserves for the deposit stay in their bank bank checking account (reserves acct) during the Fed.

In the event that debtor chooses to move the deposit to some other bank (purchasing a home, as an example), the reserves travel aided by the deposit to bank B. And when bank A doesn’t have sufficient reserves in its account if the debtor helps make the transfer, the bank borrows reserves off their banking institutions, or in a even worse situation situation, the Federal Reserve’s Discount Window which charges a penalty.

It is key though” … a bank has to fund the created loans despite being able to produce cash, because it require main bank reserves to stay deals drawn in the build up they create”

続きを読む The mortgage would end in a deposit during the bank issuing the mortgage.