The Federal Reserve stands ready to supply whatever cash demands are needed in Harvey-devastated areas of Texas like it did during Hurricane Katrina and other disasters, former Dallas Fed President Richard Fisher told CNBC on Tuesday.

Fisher explained that banks will send their armored vehicles to the Fed — either bringing currency back or taking currency out — and then circulate it through the system.

"It's about getting that lifeblood of cash into the economy, so you can fill ATMs and people can get to them so they can have it," Fisher, president of the Federal Reserve Bank of Dallas from 2005 to 2015, said in the interview on "Squawk Box."

"This week, they've instructed banks in the region ... to withhold as much cash as possible to get it out so they can get their trucks eventually to the Houston Fed vaults, take that money out, or use the Dallas vaults, if they need to," he said.

Fisher said Texas has the largest vaults supplying as much as it can to the system.

"The two biggest vaults in the system here are in Dallas and in Houston," he said.

"Houston has the largest above-ground vault in the United States," he said. "Between the two of them, they're the two largest vaults in the Federal Reserve system. One hundred and twenty-seven billion passed through those vaults last year."

Also important to note, Fisher said, is this is leading up to the Labor Day holiday, so usually the state has a greater demand for cash in a very cash intensive society.

"The Fed is open in Houston. It's open here in Dallas," Fisher said.

The Harvey disaster is unfolding on an epic scale, with the nation's fourth-largest city mostly paralyzed by the storm that has parked itself over the Gulf Coast.

Rescuers continued to take people out of inundated neighborhoods. Houston Mayor Sylvester Turner put the number by police at more than 3,000. The Coast Guard said it also had rescued more than 3,000 by boat and air and was taking more than 1,000 calls per hour.

Regarding a Harvey-related economic impact, Fisher said it will be difficult to judge but added it will likely be temporary followed by a snapback.

— The Associated Press contributed to this report.