How do banks actually create money? We explain

3-Second Blueprint (English)

1. Early gold-storing banks realized depositors rarely withdrew everything at once and began lending idle deposits out at interest.
2. As paper banknotes and IOUs circulated in trade, total money in the economy grew far beyond the banks' physical gold reserves.
3. Today, every new digital bank loan simultaneously records a balance-sheet asset and creates new deposit money for the borrower.