One connected drawing links deposit-taking banks to households, businesses, public institutions, investment funds and real assets. Follow a payment, separate it from the asset it buys, then see what changes on each balance sheet.
Colored arrowheads show direction. Dashed arrows carry collateral, financial claims or real goods. Equal line widths are schematic; this is not an observed flow dataset.
On a small screen, scroll inside the drawing or use the sector selector and the text list below. Filters affect the drawing and its connection list together. Banks are grouped here; distinct Bank A and Bank B appear in the ledger example. Boxes show roles: property and resource firms are subsets of businesses, and one banking group can perform several roles. These are not mutually exclusive statistical sectors.
Deposit payments & savingNew bank creditInvestment & security fundingReserves & public settlementCollateral & financial claimsPrincipal repaymentGoods, property & services
Text list of connections
Choose a connection to read its explanation
Connection
Direction
What moves
Central bank → Deposit-taking banks
Reserves & public settlement
Deposit-taking banks → Central bank
Reserves & public settlement
Government & public entities → Households & nonprofits
Deposit payments & saving
Households & nonprofits → Government & public entities
Deposit payments & saving
Government & public entities → Businesses & production
Deposit payments & saving
Businesses & production → Government & public entities
Deposit payments & saving
Deposit-taking banks → Households & nonprofits
New bank credit
Households & nonprofits → Deposit-taking banks
Deposit payments & saving
Households & nonprofits → Deposit-taking banks
Principal repayment
Deposit-taking banks → Households & nonprofits
Deposit payments & saving
Deposit-taking banks → Businesses & production
New bank credit
Businesses & production → Deposit-taking banks
Principal repayment
Businesses & production → Households & nonprofits
Deposit payments & saving
Households & nonprofits → Businesses & production
Deposit payments & saving
Deposit-taking banks → Real estate & construction
New bank credit
Households & nonprofits → Real estate & construction
Deposit payments & saving
Real estate & construction → Households & nonprofits
Goods, property & services
Real estate & construction → Stocks, bonds & money markets
Collateral & financial claims
Businesses & production → Raw materials & infrastructure
Deposit payments & saving
Raw materials & infrastructure → Businesses & production
Goods, property & services
Deposit-taking banks → Raw materials & infrastructure
A new loan of L records bank loan asset +L and customer deposit liability +L. The borrower gains a deposit asset and a loan obligation. When that deposit pays someone at another bank, reserve balances move between banks while the deposit changes owner. Bank of England · deposit creation ↗Federal Reserve · Fedwire settlement ↗
Assumptions: one currency; no interest, taxes, fees or physical cash. Bank A starts with reserves and equity of 2L; Bank B starts with L each. These ample initial buffers isolate the mechanics. A hypothetical return sale pays the borrower L before repayment. No forecasts or actual bank ratios are implied.
Enable JavaScript for the interactive bank ledger
Balance-sheet entry
Bank A
Bank B
Customer deposits—
Combined reserves—
Assets = liabilities + equity—
Principal cancels bank credit and deposits; interest is a separate income/expense transaction. A credit loss reduces bank equity and does not itself erase a depositor’s balance. “Liquidity” means meeting payments; “solvency” means assets covering liabilities. New lending needs both, alongside sound underwriting and regulatory compliance.
03 / DIFFERENT BANKING ROLES
Which kind of bank is involved?
These roles overlap inside universal banking groups. Institutional names, mandates, licenses and deposit protection differ across countries. A fintech interface or an investment fund is not automatically a deposit bank. Examples identify institutions, groups or business lines performing each role, rather than assigning every group to a single category. Linked official pages were reviewed on October 11, 2026.
Real institutions and the banking roles they illustrate
Institution or business model
Typical connection to the economy
Existing examples & why they fit
Retail / commercial
Households, small businesses, corporate deposits and payments; consumer and business lending. Large universal banks may combine many lines of business.
Its international network and trade services connect customers across borders. A bank is foreign relative to the country in which its branch or subsidiary operates.
Development / public bank
Long-term infrastructure or development mandates; funding may include public capital, bonds and wholesale sources.
Chime is a financial technology company, not a bank; banking services are provided by partner banks. This illustrates why a banking app and a banking license are different.
Central bank
Monetary policy, eligible settlement accounts and currency issuance; institutionally distinct from customer deposit banks.
South Korea’s central bank, showing the monetary-authority role rather than household deposit banking.
04 / WORKED TRANSACTION CHAINS
Six routes through the system
All dollar amounts below are hypothetical teaching examples. Each route follows transactions rather than treating bank money, securities and physical assets as interchangeable.
01 / SAVING & INVESTMENT
$100 from income to a bond fund
An employer pays $100 into the worker’s bank account.
The worker subscribes $100 to a fund: worker deposit −100, fund deposit +100.
The fund buys a newly issued bond: fund deposit −100, issuer deposit +100; the fund receives a bond.
The same $100 has supported several payments. It is not $300 of new money. A secondary bond purchase instead pays a prior bondholder. Saving is a period’s income less consumption; buying a fund is an asset allocation. SEC Investor.gov · primary market ↗SEC Investor.gov · secondary market ↗
02 / STOCKS & BUSINESS FINANCE
New shares versus a stock-market trade
New issue: an investor pays $1,000 to a company for new shares; the company can pay for equipment or payroll.
Secondary trade: another investor later pays $1,100 to the first investor. The company receives $0 from that trade, before any separate fees or transactions. The $100 change in the share’s price is a valuation gain, not automatically newly created bank money. SEC Investor.gov · primary market ↗SEC Investor.gov · secondary market ↗
03 / REAL ESTATE
A $250,000 home purchase
The buyer contributes $50,000 of existing deposits.
A bank originates a $200,000 mortgage and a matching deposit.
The seller receives $250,000; the buyer owns the property and owes the mortgage.
If the loan is securitized, investors buy claims on its cash flows; this is another transaction.
Buying an existing house transfers an asset. Newly built housing adds production; agent fees and other transaction services are distinct. Rent flows to landlords or property vehicles; REIT distributions reach investors. SEC Investor.gov · REITs ↗
04 / HEDGE FUND & REPO
Leverage makes a small price change larger
A fund combines $20 equity with $80 borrowing to buy $100 of securities. A 10% asset-price fall leaves $90 assets − $80 debt = $10 equity: a 50% equity loss before fees and interest.
At a hypothetical 20% haircut, $90 collateral supports only 0.80 × $90 = $72 cash borrowing. The $80 loan exceeds that capacity by $8, requiring repayment or additional eligible collateral under this simplified margin rule. Actual contracts can use different margins, netting and recourse. SEC Investor.gov · hedge funds ↗BIS · collateral margins and haircuts ↗
05 / RAW MATERIALS
$10,000 of working-capital credit
A producer receives a $10,000 bank loan and deposit.
It pays $6,000 for materials and energy and $3,000 in wages.
It retains $1,000 cash; recipients hold the other $9,000 as deposits.
Later sales fund loan repayment. Physical materials pass into inventory and output.
Before repayment, the initial $10,000 of deposits has changed owners. A commodity futures contract can hedge price exposure; its notional amount is not a $10,000 cash payment or a physical delivery.
06 / PUBLIC & OVERSEAS FINANCE
A bond-funded project crosses sectors
An investor pays $1,000 for a new government bond.
The public entity pays $1,000 to a contractor.
The contractor pays $600 domestically and $400 for imported equipment.
The foreign supplier receives the settled proceeds, possibly after currency conversion.
Taxes, coupons and maturity payments create later reverse routes. Currency conversion exchanges claims; it does not by itself create an equal amount of real resources. The exact public-account and reserve mechanics depend on the jurisdiction. Federal Reserve · sector balance sheets ↗
05 / ENTITY GUIDE
What each sector receives, holds and pays
Government & public entities
Taxes and bond proceeds finance public cash operations; spending credits the accounts of employees, suppliers and benefit recipients. Treasury and central bank have distinct balance sheets. State/local authorities, public enterprises and sovereign wealth funds belong here. Arrangements differ by country.
The central bank supplies settlement assets and implements monetary policy. Commercial banks settle eligible payments using reserve accounts. Households normally hold commercial-bank deposits, rather than a reserve account. Currency, reserve balances and a possible central-bank digital currency have different access rules.
Exporters, importers, foreign investors and correspondent banks connect domestic money to overseas accounts. Foreign-exchange trades exchange currencies; correspondent and settlement networks move claims. Exchange-rate and currency-mismatch risks can remain after a payment.
People receive wages, benefits and investment income. They spend, pay tax, hold deposits, own securities and borrow. Charities and other nonprofit institutions also hold accounts and pay staff and suppliers. Saving is income not consumed during a period; a savings account is one way to hold the resulting assets.
Companies, partnerships and sole traders buy inputs, employ people, sell output and fund equipment. Finance can come from retained earnings, bank credit, bonds or equity. Paying a supplier usually transfers an existing deposit; a new bank loan can expand deposit balances.
Buyers, sellers, tenants, developers and landlords exchange property and payments. Mortgages fund purchases; development loans fund building. Equity REITs hold property; mortgage REITs hold real-estate debt. Securitization channels mortgage payments to investors through mortgage-backed securities (MBS).
Mines, farms, energy producers, processors and logistics firms receive payments for physical inputs. Banks provide working-capital and trade finance; investors fund projects. Commodity futures can hedge prices, while physical delivery and monetary settlement remain separate transactions.
Licensed deposit institutions create a loan asset and a deposit liability when they lend. They also settle customer payments, hold reserves and securities, and obtain equity and wholesale funding. Lending is constrained by credit risk, capital, liquidity, regulation, funding cost and borrower demand. A deposit is an asset for the customer and a liability for the bank.
Investment banks arrange security issuance, advice and market-making. Broker-dealers execute trades and may extend margin/repo credit. Prime brokers support hedge funds. Custodians safeguard assets and process income; clearing houses manage counterparty exposures. These services may sit inside a banking group, but do not all create bank deposits.
Stocks are ownership claims; bonds are debt claims. A primary issue directs cash to an issuer, while a secondary trade pays the selling investor. Bills, commercial paper and repo support short-term funding. Exchanges and clearing/settlement systems organize transactions: the market box is a conduit, not the final owner of the cash.
Investment funds pool subscribed money and hold securities or other assets. Subscriptions, redemptions, distributions and trades pass through banking and custody accounts. Fund shares are investment claims; they are not the same liability as a bank deposit. A money-market fund holds short-term instruments.
Hedge funds combine investor capital with strategies that may use borrowing, short sales and derivatives. Prime brokers, repo lenders and clearing houses connect them to banks. Private-credit funds lend outside the deposit-banking model. Losses and margin calls can force asset sales and transmit stress.
Pension funds and insurers collect long-term contributions or premiums, invest in bonds, stocks and other assets, and pay retirement benefits or claims. Their obligations differ from an on-demand bank deposit. Insurers also transfer risk through reinsurance.
Private funds collect investor commitments, draw capital and acquire or finance businesses. Venture capital supplies equity for young firms. Buyouts can also use bank or private-credit debt. Distributions return exit proceeds to investors; purchasing an existing owner’s shares differs from funding a company’s new shares.
Money, financing, wealth and output are different measures
Stocks versus flows
A deposit or debt balance is measured at a point in time. Wages, lending and payments are transactions over a period. A traded dollar can appear many times in gross turnover. Changes in wealth also include valuation changes, not just transactions.
Claims and counterparties
Your deposit asset is the bank’s liability; your loan liability is the lender’s asset. Shares are equity claims and bonds are debt claims. Investment-bank client custody assets and derivatives notional cannot be treated as the bank’s spendable cash.
Financial investment versus production
Buying securities is financial investment. Buying newly produced machinery or building a new structure is real capital formation. Financial funding may support production, but securities turnover is not GDP.
How stress spreads
Loan defaults impair lender capital. Deposit withdrawals create settlement demand. Falling collateral can trigger margin calls, forced sales and further price declines. Diversification, capital, liquidity, collateral and credible payment infrastructure address different parts of this chain.
Original drawing and hypothetical arithmetic. Official references explain the mechanisms; no observed amounts, institution rankings or real-time transactions are plotted. Referenced mechanisms were reviewed on October 11, 2026.
Approximate city-level IP geolocation since September 14, 2026. Public markers require at least 3 visits; no IP address is shown or retained in this aggregate.
3,209geolocated cumulative visits125 locations meet the public privacy thresholdYour current visit was recorded near Columbus, US.
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