If you stop reading when that comes up, you'd probably not read most of the nonsense that passes for commentary on the financial system and be much better infor

If you stop reading when that comes up, you'd probably not read most of the nonsense that passes for commentary on the financial system and be much better informed as a consequence. It's not a simplification, it's completely wrong. There are plenty more descriptions of how it works if you care to look, it's just that the BoE paper is rather authoritative (coming from the bank that literally makes the rules within the UK). The mechanism by which deposits "increase a banks ability to make new loans" is just a sideshow. Deposits are not the limiting factor in the banks ability to make new loans. It might be they use deposits as a cheap way to meet their Basel III liquidity obligations, but there are other routes to doing so.