A bank creates money by

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Banks create money by lending their excess reserves. When a bank lends money, it creates a new deposit for the borrower. This increases the supply of money in the economy. The bank is able to lend money because it holds reserves, which are funds that the bank keeps on hand to cover withdrawals and other obligations. If the bank has excess reserves, it can use them to make loans and create new deposits. This process is known as the money multiplier effect.

A Bank Creates Money by