How do banks make money by holding onto other peoples' money? Banks make money because of a system revolving around their Reserve Requirement. The Reserve Requirement is a law that states: A bank without a minimum of X amount of money cannot open for business. Now "X" is a percentage set by an organization called The Board Of Governors. So if I deposit 100 dollars into a bank that has a reserve requirement of 10 percent, the bank cannot open the next day unless they have at least 10 dollars (assuming I am the only one who made a deposit in said bank). The 90 dollars that are left is what is called the Excess Reserves. This Excess Reserve total is then multiplied by one over the reserve requirement, and the final total is the greatest amount of money the bank can make off of keeping my money for me.