Having a checking account at Bank of America with $500 in it is very similar to having five $100 Bank of America Traveler’s Checques. Each represents a $500 liability to Bank of America. The B of A doesn’t pay anything for those checks beyond paper and printing costs; it sells them to you for $100 (or slightly more) each. (It loses the $100 back if/when a check is redeemed.)
Having a $500 checking account at the Federal Reserve Bank is, similarly, similar to having $500 in Federal Reserve notes! * IOW, a F.R. banknote is very similar() to a Traveler’s Checque, but is drawn on the Central Bank instead of a private bank. Remembering this simple fact would clear up some of the confusion about U.S. “money.”
(* - Someone will be along to contradict me. Yes, there are many differences; for one thing private citizens cannot have checking accounts at FRB; checks are not obligatory “legal tender” for debts, etc., etc. Another difference is that B of A might redeem its checks with F.R. banknotes; F.R. doesn’t have anything special to “redeem” its notes with other than coins, or other notes! But focusing on these differences will obscure the important simplification that allows laymen to understand the underlying nature of F.R. banknotes.)