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How does a regular bank print money?

• jiggunjer 9y ago
  The parent comment alluded to this. They operate in a trust-based network with other banks. So when they add X to an account (e.g. a loan) and that person tries to spend it by transferring it to another account at another bank, the bank is effectively in debt with another bank. This inter-bank loaning system can run on this virtual cash mechanism as long as the person who borrowed X manages to pay it back over time. You can probably guess this puts banks in a very privileged position. Hence the high requirements for being able to start a bank of your own, and the government regulation intended to control inflation and fraud.