Bank loans are new money according to The Bank of England http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycrea

Bank loans are new money according to The Bank of England http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf http://www.bankofengland.co.uk/publications/Documents/quarte... The reason banks get into trouble is because they cannot meet even their tiniest obligations in actual currency. In a cashless society this will not be a problem, just unlimited digital money creation.