To understand the US monetary system one needs to understand the system below, that is the flows and stocks of money.
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Treasury (debt) and Fed (monetary policy) were separated in 1951. See this article for an explanation of how they interact with each other in practice.
The banks:
- How much money can they loan? What are the reserve requirements?
- How can they acquire reserve?
For everything related to reserve requirements, you can read the Fed’s explanation of reserve balance requirements (PDF). This includes reporting timelines.
The treasury:
- How does it get money?
Individuals pay taxes, spend money and save money. Saving increases the reserves. Since Bale III banks are required to also hold High Quality Assets as reserve, often sovereign debt.
