Creating money refers to the process by which commercial banks increase the overall amount of money in an economy. It occurs when they make loans or purchase assets using newly created electronic deposits.
Related terms
Monetary Base: The monetary base represents the total amount of currency in circulation plus reserves held by commercial banks at central banks.
Money Supply: The money supply refers to all forms of currency (cash) in circulation along with various types of bank deposits that can be used for transactions.
Open Market Operations: Open market operations involve central bank purchases or sales of government securities to influence interest rates and control monetary policy.