Okay ..so let's for example sake , every bank need to put up 1 percent of their deposits to Fed .. it is sometimes called high power money .. now if bank A 's daily deposit go down , they can reduce their reserve , and bank B s deposit increase then they need to increase their reserve .. means there is a transaction between the two banks .. Fed provides a target lending rate .. normally called Fed fund rate .. that is what Fed chair announces when he claims to cut the interest rates ..

As a side - This interbank lending rate has very little impact on long term T bills ..

Since only a small fraction of needs to be kept with reserve ( or central bank ) , this system is called Fractional Reserve system ..

As regards to how much a bank lend out as loans ( assets ) or keep in T bills ( assets ) is totally upto banks .. if they make good loans .. and balance the sheet with deposits they receive ( liabilities) they are good .. in effect they can't lend more than the total deposits ..

Means JPMC can lend only 4 trillion minus the reserve money . .. btw it is not a bad idea have little more assets than liabilities..hope this is clear .. so the idea that banks print money out of thin air is not entirely true ..

Now of course with such a manual system and dated technology..there are always systemic failures .. and too big to fail is a universal problem ..sadly (:-