When cash or coins are deposited in a transactions account at a bank,the money supply immediately increases by the amount of the deposit multiplied by the money multiplier.
The process of deposit creation does not occur until the money is lent out to a new customer.

Question

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When cash or coins are deposited in a transactions account at a bank, the bank is required to keep a percentage of that deposit as reserves and only lend out the remaining amount. This reserve requirement limits the amount of money that can be created through loans and the money multiplier effect. Therefore, the process of deposit creation begins as soon as the bank lends out a portion of the deposit, not when it lends out to a new customer.

When Cash or Coins Are Deposited in a Transactions Account