Why is cash considered a liability for banks?

Question

Curious. Trying to understand what’s happening with svb, and this concept does not click yet.

In: 1

Answer 1

I’m an accountant, and no, cash is not a liability.

If you have a bank account, the bank owes you that money. When you make a withdrawal, you’re collecting part of the debt. So your bank account is a liability on the bank’s books. But the cash they have is not a liability; it’s an asset. They have cash on hand in case you make a withdrawal, but that doesn’t make the cash itself a liability.