[ThomPete]

Loans are technically debt but can easily be income de-facto i.e. it can be used as if they are income.

When a bank borrow you money they don't actually take it from somewhere they fundamentally can create it because of quantitative easing pushed by central banks.

The digital monetary system today is a far cry from the gold based system and the ability to use money as if they are income are very real. Money is more a concept today.

[opportune]

Banks creating money is not quantitative easing. This is a misconception you probably got from a vast oversimplification of what QE is. Banks can create money even without QE (and have done so for a very long time now).

https://en.wikipedia.org/wiki/Quantitative_easing

[ThomPete]

I can see how my writing would have been misunderstood so let me rephrase.

They can't do it without the Central Bank and it's the same mechanism as allows for QE. It's only possible in a FIAT based system.

When banks do it it's called fractional reserve banking but the mechanism is fundamentally the same, the ability to "create money".

[opportune]

Fractional reserve banking doesn't require central banking either. It only requires that people accept more abstract forms of money such as bank notes, and that not too many people try to withdraw their money at the same time.

There's no mandate that bank notes need to be issued by a central bank. See the article: https://en.wikipedia.org/wiki/Banknote

[ThomPete]

"National banknotes are generally legal tender, meaning that medium of payment is allowed by law or recognized by a legal system to be valid for meeting a financial obligation."

So yes it requires a central bank as it's through them the recognition happens. Philosophically all money requires is trust no matter what not even a legal entity as long as people trust it, but practically to claim that central banks aren't needed for FRB is wrong to the best of my knowledge.