When you transfer money from one bank to another, are they just moving virtual bits around? Is anything backing those transfers? What prevents banks from just fudging the bits and “creating” money?

Question

When you transfer money from one bank to another, are they just moving virtual bits around? Is anything backing those transfers? What prevents banks from just fudging the bits and “creating” money?

In: 1559

Answer 1

Been doing wire and ach/direct deposits for years now. If you have two banks that aren’t affiliated with each other, the originating deposit goes to the US Treasury for verification before it goes to the end bank. Thats why you can’t “fudge” anything.