The banks can keepthe currency as vault cash, which also counts as reserves.
It says that you have to keep deposits with us here at the central bank; either that or else keep vault cash and show that you have it as reserves for your deposits.
Deposits of the US Treasury, depository institutions, foreign Banks and official institutions, as well as vault cash in depository institutions are excluded.
When $100 of currency is returned to the banks, deposits and vault cashare increased.
If the bank replenishes its vault cash, its account at the ReserveBank is drawn down in exchange for notes issued by the Federal Reserve.
Reservebalances and vault cash in banks, however, are not counted as part of the moneystock held by the public.
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