Numerous authorities have actually stated it: banking institutions try not to lend their deposits. They produce the cash they provide on the books.
Robert B. Anderson, Treasury Secretary under Eisenhower, stated it in 1959:
Whenever a bank makes that loan, it just enhances the debtor's deposit account into the bank by the quantity of the mortgage. The amount of money isn't extracted from other people's build up; it absolutely was not formerly compensated into the bank by anybody. It really is brand new cash, produced by the financial institution for the utilization of the debtor.
The financial institution of England stated it within the spring of 2014, composing in its quarterly bulletin:
The fact of exactly just how cash is developed today varies through the description present in some economics textbooks: in place of banking institutions getting deposits whenever households conserve then lending them down, bank lending produces deposits... Each time a bank makes that loan, it simultaneously produces a matching deposit into the debtor's banking account, therefore producing money that is new.