so the bank funds the loan by creating $100 and crediting them to your account those $100 that they credited you did not exist before - the bank created that money on demand those $100 are not physical cash - they're an entry in a digital ledger (i.e. in a computer system)

Illya Gerasymchuk 2025-08-05 21:45

a loan for the bank ends up earning more than the lent amount this is because the borrower repays the principal (loan amount) + interest