OldMcdonald I might not be correct with this, but doesn't the local bank have to borrow money from the Fed only if the do not have enough reserves in their own bank to cover the requirement?

It is my understanding that the money is created with the loan document when the loan is deposited in the checking account to be spent out. In other words, the local bank creates the loan money. I thought the Fed only comes into play if the local bank does not have enough capital.

Correct me if I am wrong.

John