"Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers."
MODERN MONEY MECHANICS, Federal Reserve Bank, Chicago
..
."In today's world of computerized financial transactions, the Federal Reserve Bank pays for the securities with an "telectronic" check drawn on itself. Via its "Fedwire" transfer network, the Federal Reserve notifies the dealer's designated bank (Bank A) that payment for the securities should be credited to (deposited in) the dealer's account at Bank A. At the same time, Bank A's reserve account at the Federal Reserve is credited for the amount of the securities purchase. The Federal Reserve System has added $10,000 of securities to its assets, which it has paid for, in effect, by creating a liability on itself in the form of bank reserve balances."
MODERN MONEY MECHANICS, Federal Reserve Bank, Chicago
.
."Carried through to theoretical limits, the initial $10,000 of reserves distributed within the banking system gives rise to an expansion of $90,000 in bank credit (loans and investments) and supports a total of $100,000 in new deposits..."
MODERN MONEY MECHANICS, Federal Reserve Bank, Chicago
.
