[bertolo1988]

"No bank can't create cash like they want.", sadly they can.

All they have to do is to lend some money.

[tome]

No they can't. There are reserve requirements which limit the amount of bank deposits (not "money") a bank can create.

[SCdF]

Can you go into more detail about what you mean here?

[reallymental]

Leverage, banks hold the ability to lend a certain sum of money to multiple parties, thereby 'creating' more money.

The amount of money lent vs the amount of parties is the leverage ratio. It's usually managed well, but can get out of hand pretty quickly.

Edit: Forgot to mention reserve amounts. They are crucial.

[Retric]

Banks don't create money. People treat IOU's after depositing money in banks as money, but they are IOU's not money.

The difference may seem meaningless most of the time, but occasionally it becomes extremely important.