[icebraining]

That's the textbook model of money creation, but it's outdated. See "Money creation in the modern economy", by the central Bank of England: http://www.bankofengland.co.uk/publications/Documents/quarte...

Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits. (...)

Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.