How Much Money Do Banks Hold & How Is It Used?

Banks play a central role in the financial system, acting as intermediaries between those who have money and those who need it. They accept deposits from individuals and businesses, safeguarding these funds and making them accessible for transactions. Understanding how much money banks hold and what they do with it provides insight into the broader economy.

The Aggregate Amount Banks Hold

The money banks hold primarily consists of customer deposits across various account types. These include checking accounts, savings accounts, money market deposit accounts, and certificates of deposit. Banks also maintain reserves, which are either cash in their vaults or balances held at the central bank. These reserves ensure banks have readily available funds to meet daily operational needs and customer withdrawals.

As of June 2025, total deposits within the U.S. banking system stood at approximately $19.00 trillion. This figure represents the vast pool of funds entrusted to banks by individuals, businesses, and other entities. Total reserves held by depository institutions in the U.S. were around $3.356 trillion in June 2025. These aggregate amounts are dynamic and can fluctuate based on economic conditions, consumer behavior, and monetary policy changes.

Where Bank Funds Originate

The primary source of funds for banks comes directly from their customers through various deposit accounts. When individuals or businesses deposit money into checking, savings, or money market accounts, these funds become part of the bank’s available capital. Certificates of Deposit (CDs) also contribute, as customers commit funds for a specified period in exchange for a fixed interest rate.

Banks also acquire funds from other financial institutions, such as by borrowing from fellow banks in the interbank lending market. They may also borrow directly from the central bank through its lending facilities. Customer deposits remain the most substantial origin of the money banks hold.

How Banks Utilize Held Money

Banks operate under a system known as fractional reserve banking. This means they do not keep every dollar deposited physically on hand, but instead hold only a fraction as reserves and lend out the majority. This system allows banks to create new money in the economy by facilitating loans. The current reserve requirement for banks in the U.S. has been set at 0% since March 2020.

Despite the 0% reserve requirement, banks continue to hold reserves for liquidity management and to earn interest on those balances. Funds collected from deposits are primarily used for lending. They provide loans to individuals for purposes such as mortgages, car loans, and personal expenses, and to businesses for expansion, operations, and investment. A portion of held money is also invested, often in safe assets like government securities, which generate income for the bank.

Ensuring the Safety of Deposited Funds

The safety of money deposited in banks is a concern for the public, addressed primarily through deposit insurance. The Federal Deposit Insurance Corporation (FDIC) safeguards customer funds. The FDIC insures deposits up to $250,000 per depositor, per FDIC-insured bank, for each account ownership category. This coverage applies to various types of deposit accounts.

Different ownership categories, such as individual accounts, joint accounts, and certain retirement accounts, are separately insured, allowing for greater coverage at a single institution. FDIC insurance does not extend to non-deposit investment products like mutual funds, annuities, stocks, or bonds, even if offered by an FDIC-insured bank. Since its establishment in 1933, no depositor has lost any FDIC-insured funds due to a bank failure.

Beyond deposit insurance, regulatory oversight and capital requirements also contribute to financial stability. Banks are mandated to maintain a certain amount of their own capital, acting as a buffer against potential losses and reinforcing the overall security of the financial system.