Commercial Bank Loans Create Money

According to the Bank of England, most money in the UK economy is created by commercial banks when they issue loans, not by printing presses. When a bank grants a £100 loan, it credits the borrower's account with £100 in new deposit money that did not previously exist. Repaying the loan deletes that electronic money, meaning banks create money rather than wealth. Banks create around 80% of the UK's money this way, although regulations, capital requirements, and payment obligations limit their lending.

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