The MIT Alum club in New York organizes an event called finance brunch, which forwarded me this article last weekend:
http://www.truthsetsusfree.com/ModernMoneyMechanics.pdf
There is a blow-by-blow account inside on the mechanics of the balance sheet when a bank makes loans and takes deposits.
The basic idea is this: ΔAssets = ΔLiabilities is always true because it is an accounting identity. However, liquid assets = liquid liabilities is not always true.
When a bank lends out money, it merely creates a number in its ledger. The (asset~liability) pair is (loan~checking account). When the borrower or a depositor withdraws currency, however, it is (reserves~checking account) that is deducted. The reserve requirement is the required ratio of reserves to checking accounts, basically a requirement that banks always be able to pay cash for a certain fraction of its checking account balances.