Fractional reserve banking as a model actually requires deposits in order to make loans, but you're correct in saying that banks do not lend out deposits at all

Fractional reserve banking as a model actually requires deposits in order to make loans, but you're correct in saying that banks do not lend out deposits at all, they in fact create money by lending. This is the clearest overview of the process I've ever come across, and it's from the Bank of England who should know how :) https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf https://www.bankofengland.co.uk/-/media/boe/files/quarterly-... There's another one covering money more generally as well. https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-in-the-modern-economy-an-introduction.pdf https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...