The wider world · 85 / 90 · 3 min

A bank deposit

The number in the app is the bank's ledger. The notes are not in a box with your name.

A worked case

A person sees the balance and treats it as cash in hand. The bank pauses withdrawals. The screen still shows the number. The cash was the claim. The pause was the bank using it.

What you hold

You paid money in. The bank wrote a number down. That number is a promise, and the bank is already using the money. This is what a bank is.

A queue can form outside the branch while the screen still shows the balance. The screen does not have to change for the door to say no.

Keys are a different object

Coins in your own keys are not a deposit. An exchange balance is closer to one than people like to admit. Until a withdrawal lands in your hands, both are a firm saying it owes you.

The bank is paid by lending your money on and keeping the gap. The terms, and the law around them, can change the exit. The bank can refuse it. So can a government, by limiting what leaves in a day.

The queue outside Northern Rock

On 14 September 2007 people queued outside Northern Rock branches in Britain to take their money out. The Bank of England had agreed to provide the lender with emergency liquidity. The pictures were of a bank run. The balances on the passbooks had not become cash in a box. They were claims on a building society that had funded itself heavily in wholesale markets, and those markets had shut.

In February 2008 the bank was taken into public ownership. Depositors were not the same as shareholders, and the state stood behind retail deposits in a way it did not stand behind the shares. That difference is the whole lesson. A deposit is a claim. Who pays, who can change the rules, and who can stop the withdrawal are questions about the bank and the state, not about the number in the app.

The same shape has happened without a British high street. In March 2013 deposits in Cyprus's two largest banks were used in the rescue: insured deposits were spared, and a large part of the uninsured money was not. The word deposit did not mean the money could not be taken. It meant you had to read who was protected, and up to how much. This page is not legal advice about any country's deposit guarantee. It is the check, pointed at a bank.

Read it yourself

• Northern Rock
• 2012–2013 Cypriot financial crisis

These links are the record. They are not a recommendation, and they are not instructions. A news story or a court paper can still be wrong about a detail. The check does not change because a famous name is in the story.

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