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>> what makes a bank a bank is that it will loan out money deposited by other people No, a bank creates money to loan out from nothing. No deposits required.
by CraigJPerry 4y ago
>> what makes a bank a bank is that it will loan out money deposited by other people
No, a bank creates money to loan out from nothing. No deposits required.
As a sibling comment points out, other jurisdictions exist so here's the UK central bank's explainer on the topic: https://www.bankofengland.co.uk/explainers/how-is-money-created https://www.bankofengland.co.uk/explainers/how-is-money-crea...
- fatneckbeard 4y agobut once the bank has made the loans, it has to keep track of how many it has made and how many are delinquent. i could be missing something.
- CraigJPerry 4y agoYeah of course, but that's not the point the parent was contesting. They claimed a bank loans from funds deposited which isn't the case. If a bank chooses to create an asset (your liability) by loaning money to you, if you then fail to repay, then they're in a bad spot. They're certainly not allowed to just delete the records of the loan being issued to get rid of the delinquent asset on their balance sheet.