How do banks create money?

Name: How do banks create money?
Brand: Quizplus
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Banks create money when they make loans. When a bank issues a loan, it creates a new asset on its balance sheet - the loan itself. But at the same time, the bank creates a new liability - a new deposit made to the borrower's account. This new deposit is "new money" in the economy, as it increases the total amount of money in circulation. This is how banks create money through the process of fractional reserve banking.

How Do Banks Create Money