You have inherited $500,000 from your Uncle Willy, whom you have never met. You receive notice of your inheritance, but Uncle Willy kept his money at Other Bank. How does that money get transferred from the account of Uncle Willy's estate at Other Bank to your account at Your Bank?

This table shows the transfer of that $500,000 from Other Bank to Your Bank. It includes the following transactions:

Other Bank

1. Reduces (debits) it's Deposits account liabilities by $500,000
2. It also reduces (credits) it's Reserves account (an asset) by $500,000 (and sends a notice of the transfer to the Fed and Your Bank.)

The Fed

When the Fed receives notice of this transfer it:

1. reduces (debits) the Reserves account of Other Bank by $500,000 (reserve dollars);
2. increases (credits) the Reserves account of Your Bank by $500,000 (reserve dollars) for your benefit.

(In the Fed's total Reserves balance, these transactions cancel each other and make no change in the Fed's total Reserves balance.)

Your Bank

1. increases (debits) it's Reserves account (an asset) by $500,000, and
2. increases (credits) it's Deposits account liabilities by $500,000 for your account.

You

1. increase (debit) your Cash in Bank account by $500,000, and
2. increase (credits) your net worth by $500,000 (see Balancing Transactions)

You can see that this transfer, by itself, neither increases nor decreases total bank deposits. It, therefore, has no impact on the quantity of money.