Michael Shedlock gives an explanation of bank accoutns

From Money Supply - A Question About Credit:

Believe it or not savings accounts are not aptly named.

Saving accounts would be better described as lending accounts. By that I mean, savings accounts consist of deposits that by agreement, are make available for loans. In other words, banks take those deposits and lend them out. In return, depositors get interest. This arrangement is known by the depositor of that money. After all, how else could the bank pay interest on the money if the bank did not loan it out at a higher rate?

The reality then is that money in savings accounts is not really there (nor is it expected to be there). The money was lent out (spent or invested) with a promise by the borrower to pay the money back in the future. In the banking industry such accounts are called TDA accounts (Time Deposit Accounts).

Because the money was willingly lent out it's a credit transaction. There is no money in saving accounts. All that is there is a promise by someone to pay back what was lent out.

Checking accounts, however, are known in the industry as DDA accounts (Demand Deposit Accounts). Money deposited to a DDA (checking) account is by definition available on demand. At least its supposed to be. In actual practice, given that Greenspan authorized sweeps from DDA accounts, money that is supposed to be readily available on demand isn't really there in practice.

Sweeps are transactions that move (sweep) money from one account (in this case a DDA account) into another account (say a savings account) where the money can be lent out. This happens nightly and is done without the checking account depositor having any say in the matter. To repeat: Money that is supposed to be there, really isn't there. It's all a mirage. If you think money is sitting there in your checking account to the amount shown on your statement, you are mistaken. It was lent out.

The system would literally freeze up if all depositors wanted their money in cash tomorrow. Heck, there would be massive convulsions if even 10% of the people wanted their money in cash tomorrow. Far more money has been lent out than really exists.