I’m saying, by 100% that the bank could not use your money to make loans from because it is sitting in the vault at all times ready for you to withdraw at any given moment.
When it is 99%, it means the banks allow themselves to make loans based on the 1% they did not secure because they do not expect in the course of the day 100% of people coming to take their money out at once.
Over the course of the day, a certain number of people will deposit money and a certain number will withdraw money. The banks use that principle to decide how much money, as a percentage, to keep in the bank and how much they can do other things with your money, such invest it or make loans from it. The banks have it down pat as to how much they can risk not having the money secured and still remain solvent.
It works, until something happens when the population panicks and everybody goes to the bank to withdraw their money and find the bank didn’t keep all the money because they took some money and invested it and took other money and loaned it. Then you have a bank collapse.
The amount of cash that could potentially go out the door in a flood of withdrawals is dwarfed by the enormous volume of money changing hands to and from bank accounts on a daily basis. Just think about the size of a bank account that is required to handle payroll transactions for a typical mid-sized U.S. company, let alone a Fortune 500 company.