How Banks Create Money From Nothing (Official Documents)

Every number in this video comes from official documents from the Federal Reserve, the FDIC, the CFPB and the Bank of England. Sources below.

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When a bank makes a loan, it creates a brand-new deposit: the Bank of England says so, and so did the Chicago Fed's Modern Money Mechanics. Almost 90% of America's money isn't cash, the Fed's reserve requirement has been zero since March 2020, and the Fed now pays banks 3.90% on reserves while the average savings account pays 0.37%. Banks earned $90.1 billion in Q2 2026. Plus what SVB's collapse showed, and three numbers to check at your own bank. Facts, not financial advice.

Watch next: https://youtu.be/NCKjORQOTWU

Chapters
0:00 Intro
0:58 The Myth
2:52 The Printing Press
4:40 The Limit
6:12 The Spread
8:36 The Weak Spot
9:49 Three Numbers To Check

Sources
- Federal Reserve, H.6 Money Stock Measures (Sep 22, 2026): https://www.federalreserve.gov/releases/h6/20260922/
- Bank of England, Money creation in the modern economy, Quarterly Bulletin 2014 Q1: https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
- Bank of England, How is money created?: https://www.bankofengland.co.uk/explainers/how-is-money-created
- Federal Reserve Bank of Chicago, Modern Money Mechanics, revised June 1992 (FRASER): https://fraser.stlouisfed.org/title/modern-money-mechanics-9810/modern-money-mechanics-717249
- Federal Reserve, 2026 currency print order: https://www.federalreserve.gov/paymentsystems/2026_currency_print_order.htm
- Federal Reserve, Federal Reserve liabilities: https://www.federalreserve.gov/monetarypolicy/bst_frliabilities.htm
- Federal Reserve, FAQ on accounts for individuals: https://www.federalreserve.gov/faqs/does-the-federal-reserve-maintain-accounts-for-individuals-can-individuals-use-such-accounts-to-pay-bills-and-get-money.htm
- Federal Reserve, H.4.1 Factors Affecting Reserve Balances (Oct 8, 2026): https://www.federalreserve.gov/releases/h41/20261008/
- Federal Reserve, H.4.1 of Apr 14, 2022 (balance sheet peak): https://www.federalreserve.gov/releases/h41/20220414/
- Federal Reserve, Reserve Requirements: https://www.federalreserve.gov/monetarypolicy/reservereq.htm
- Federal Reserve, implementation note of Sep 16, 2026: https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a1.htm
- FDIC, National Rates and Rate Caps, September 2026: https://www.fdic.gov/national-rates-and-rate-caps/national-rates-and-rate-caps-september-2026
- Freddie Mac, Primary Mortgage Market Survey (Oct 8, 2026): https://www.freddiemac.com/pmms
- Federal Reserve, G.19 Consumer Credit (Oct 7, 2026): https://www.federalreserve.gov/releases/g19/20261007/
- CFPB, The Consumer Credit Card Market (Dec 30, 2025): https://www.consumerfinance.gov/data-research/research-reports/the-consumer-credit-card-market-2025/
- CFPB, Overdraft/NSF revenue in 2023: https://www.consumerfinance.gov/data-research/research-reports/data-spotlight-overdraft-nsf-revenue-in-2023-down-more-than-50-versus-pre-pandemic-levels-saving-consumers-over-6-billion-annually/
- FDIC, Quarterly Banking Profile, Q2 2026: https://www.fdic.gov/news/press-releases/2026/fdic-insured-institutions-reported-return-assets-137-percent-and-net
- FDIC, Quarterly Banking Profile, Q4 2025: https://www.fdic.gov/news/press-releases/2026/fdic-insured-institutions-reported-return-assets-124-percent-and-net
- Federal Reserve, Large Commercial Banks (Jun 30, 2026): https://www.federalreserve.gov/releases/lbr/current/
- FDIC, Community Banking Study (Dec 2012): https://www.fdic.gov/resources/community-banking/report/2012/2012-cbi-study-full.pdf
- Federal Reserve, Review of the Supervision and Regulation of Silicon Valley Bank (Apr 28, 2023): https://www.federalreserve.gov/publications/files/svb-review-20230428.pdf
- FDIC, Failed Bank List: https://www.fdic.gov/bank-failures/failed-bank-list
- FDIC, Understanding Deposit Insurance: https://www.fdic.gov/resources/deposit-insurance/understanding-deposit-insurance

Research and fact-checking: Cost Unboxed. This video is for information only, not financial advice.

Corrections and context
• Correction: the five banks that failed in 2023 had about $532 billion in total assets at failure, per the FDIC's bank failures data; the $552 billion in the video is not supported by it. The count of five failures is correct.
• Context: the print order is gross note production; much of it replaces unfit notes, so it is not new money.
• Context: "climbing again" is a single increase in the rate on reserve balances, from 3.65% (Dec 11, 2025) to 3.90% (Sep 17, 2026).
• Context: the FDIC's 0.37% is the average savings rate at the $2,500 tier; the 3.90% is what the Fed pays banks on reserves. Different measures.
• Note: "almost 90% isn't cash" is our own division (currency / M2, Fed H.6), not a figure the Fed publishes.