A deposit is a balance held at a commercial bank or similar institution. It is a liability of the bank and an asset of the depositor. Deposits are usually repayable on demand or at short notice, and they can be used to make payments.

Deposits are created when banks lend. A new loan is matched by a new deposit on the bank's balance sheet. When the loan is repaid, the deposit is extinguished.[1]

Deposits are included in broad money measures such as M1 and M2, depending on their type and liquidity.[2]

Sources

  1. McLeay, Michael; Radia, Amar; Thomas, Ryland. Money creation in the modern economy. Bank of England Quarterly Bulletin. 2014. View source Accessed Nov 11, 2026.
  2. Board of Governors of the Federal Reserve System. Money Stock Measures (H.6). Federal Reserve. 2026. View source Accessed Nov 11, 2026.