You're missing something very important. Banks do not have a 1 to 1 accounting of deposits with cash. Hence why bank runs are a problem, in a panic situation where everyone wants to withdraw their money, they literally do not have it. So physical cash you deposit just sits around until someone else wants to make a withdrawal. As long as your accounts are up to date and the bank isn't perceived as insolvent (by making too many bad loans), then we are all willing accept this situation.