How bank generate their money
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Most of the money in our economy is created by banks, in the form of bank deposits – the numbers that appear in your account. Banks create new money whenever they make loans. ... Banks can create money through the accounting they use when they make loans.
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Money is created when bank lend.
The rules of double entry accounting dictate that when they create a new loan asset they must also create an equal and opposite liability in the form of new demand deposit...Commercial banks ability to create money is constrained by capital.
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