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by PeterisP 4776 days ago
I'm not sure on the exact USA fed reserve rules, but typically when the interbank deals are cleared through a centralised system or a national bank (as opposed to mutual correspondent accounts common for international deals), then it does not honor ALL inter-bank transactions - they validate against the bank's capacity to pay (i.e., their deposits at that central bank), the overdrafts are limited and a bankrupt or malicious banking company can't do that much damage.

In any case, if you fake a dollar in Bank A systems, then no matter where and how you withdraw or transfer it, it's a dollar that Bank A loses.

1 comments

There is a vary specific exception. When a lot of FDIC ensured bank fail at the same time the FED create money out of thin air to pay some of the depositors. However, while you may have added a new line in a database somewhere there is a large audit that takes place and you may or may not get though that audit. Though in most cases when a bank fails it's paid out of FDIC funds which are just another form of insurance.