> it has to be prepared for them to take that money and spend it more or less immediately
Right, but the bank also knows that people are doing the exact same thing with other banks; borrowing money from the other bank which will get spent immediately back at this one.
Banks are prepared to meet the difference in money in and money out, they're not prepared to meet the total volume of deposits. When the bank gets this wrong there's a liquidity crisis (or a bank run) which causes Big Problems.
Right, but the bank also knows that people are doing the exact same thing with other banks; borrowing money from the other bank which will get spent immediately back at this one.
Banks are prepared to meet the difference in money in and money out, they're not prepared to meet the total volume of deposits. When the bank gets this wrong there's a liquidity crisis (or a bank run) which causes Big Problems.