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Bank deposits


The amount of money standing to the credit of a customer of a bank. Bank deposits are assets of its customers and liabilities of the bank. Deposits may arise from the payments of cash or a cheque to a bank for credit to a customer or by transfer into an account from another account, including a loan from a bank to its customer. Bank deposits are simply I.O.U.s written in the books of the bank. They do not necessarily reflect actual holdings of cash by the bank. Since bank deposits are used in the settlement of debts, they are money in the economic sense, so that by creating deposits banks create money. A deposit may be on current account or deposit account. These two types of account are known as demand deposits and time deposits in the U.S.A. Bankers' deposits are deposits by a commercial bank at the central bank.


Reference: Oxford Press Dictonary of Economics, 5th edt.