What makes a bank, a bank? Is it deposit-taking, credit
operations, or payment facilitation? While these are all important
components of traditional banking, they are just parts of a
bank's master function: money creation. At its core, banking is
about increasing the money supply. It's a misconception to view
banks as mere intermediaries for the flow of money in the economy.
Rather, banks actively participate in and drive the creation of new
money.
When we think of money creation, we often imagine coins being
minted or bills being printed, but these physical forms of currency
represent only a small fraction of the overall money supply. In
reality, the majority of money is created through the operations of
private commercial banks.
