People don't withdraw cash. They transfer it to another bank. When they transfer it to another bank the destination bank becomes a depositor in the source bank.
That's how correspondence banking works.
Central banking is nothing more than an optimisation of that process. There is no need for central bank money to do bank transfers. The liquidity automatically arises.
People don't withdraw cash. They transfer it to another bank. When they transfer it to another bank the destination bank becomes a depositor in the source bank.
That's how correspondence banking works.
Central banking is nothing more than an optimisation of that process. There is no need for central bank money to do bank transfers. The liquidity automatically arises.