What do banks keep to satisfy demands for withdrawals?

Banks maintain a reserve of liquid assets, known as reserves, to satisfy demands for withdrawals. These reserves usually consist of cash on hand and deposits held at the central bank. Additionally, banks may also keep a portion of customer deposits in the form of easily accessible investments or short-term securities to ensure they can meet withdrawal requests. This practice is part of the fractional reserve banking system, which allows banks to lend out a portion of deposits while still being able to fulfill withdrawal demands.