Answer · confidence: partial
Did central banks change how they explained bank loans and new deposits after 2008?
Research question: How have central bank quarterly bulletins and money-creation explainers from the past two decades described the link between bank lending, deposit creation and reserves, and did their wording change after 2008?
The records show that the Bank of England's 2014 Q1 Quarterly Bulletin carried two money articles, though the archive listing gives only their titles and page numbers 1. Those articles say most UK money is bank deposits created when commercial banks make loans 2, and they reject the view that banks simply lend out savers' deposits or multiply up central bank money 9. They also say deposits influence how much reserve money banks want to hold, that the Bank supplies those reserves on demand in normal times 11, and that quantitative easing reserves cannot be multiplied into extra loans 12. The facts contain no pre-2008 central bank bulletin wording, so they cannot show whether the wording changed after 2008. The newest fact is a 2025 paper, so the most recent evidence is over a year old as of October 2026 17.
Checked 2026-10-21. Only documented and supported facts are used.
Dig deeper on this questionSources
[1] documented
The Bank of England's 2014 Q1 Quarterly Bulletin included two topical articles on money, 'Money in the modern economy: an introduction' and 'Money creation in the modern economy'. The archive listing gives only titles and page numbers, not their content on bank lending, deposit creation or reserves.
"2014 Q1. Vol 54 No. 1. Topical articles: 'Money in the modern economy: an introduction' p.4; 'Money creation in the modern economy' p.14;"55 - BANK OF ENGLAND QUARTERLY BULLETIN | Bank of England Digital Archive
[2] supported
Most UK money is bank deposits, and the main way these deposits are created is when commercial banks make loans, which creates new deposits in borrowers' accounts.
"The principal way in which they are created is through commercial banks making loans : whenever a bank makes a loan, it creates a deposit in the borrower’s bank account, thereby creating new money."Bank of England on Money and Money Creation in the Modern Economy
[3] documented
The article rejects the money multiplier view, in which central bank money is 'multiplied up' into loans and deposits.
"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."PDF Money creation in the modern economy - Bank of England
[4] supported
Banks do not simply act as intermediaries lending out savers' deposits, and they do not 'multiply up' central bank money to create new loans and deposits.
"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."PDF Bank of England Quarterly Bulletin 2014 Q1 - antiterror-info.org
[5] supported
The Bank of England said this account of money creation differs from the story in some economics textbooks, which it described as inaccurate.
"This description of how money is created differs from the story found in some economics textbooks."Bank of England on Money and Money Creation in the Modern Economy
[6] documented
The Bank of England says most money in the modern economy is created by commercial banks when they make loans.
"This article explains how the majority of money in the modern economy is created by commercial banks making loans."Money creation in the modern economy - Bank of England
[7] supported
Bank deposits make up about 97% of the amount of money in circulation, as of December 2013, and are mostly created by commercial banks themselves.
"Of the two types of broad money, bank deposits make up the vast majority — 97% of the amount currently in circulation."PDF Money creation in the modern economy - Bank of England
[8] supported
The Bank of England describes lending as creating deposits, which reverses the sequence usually presented in textbooks.
"the act of lending creates deposits — the reverse of the sequence typically described in textbooks."PDF Bank of England Quarterly Bulletin 2014 Q1 - antiterror-info.org
[9] supported
The Bank rejected the view that banks act as simple intermediaries lending out savers' deposits, and the view that they multiply up central bank money into loans.
"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."Bank of England on Money and Money Creation in the Modern Economy
[10] documented
The Bank says the popular view that banks simply lend out deposits saved with them, or 'multiply up' central bank money, is a misconception.
"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."Money creation in the modern economy - Bank of England
[11] supported
The amount of bank deposits influences how much central bank money banks want to hold in reserve, and those reserves are supplied on demand by the Bank of England in normal times.
"The amount of bank deposits in turn influences how much central bank money banks want to hold in reserve (to"PDF Bank of England Quarterly Bulletin 2014 Q1 - antiterror-info.org
[12] supported
Reserves created by quantitative easing cannot be multiplied up into extra loans and deposits, just as in normal times.
"Just as in normal times, the reserves created by QE cannot be ‘multiplied up’ into additional loans and deposits."Bank of England on Money and Money Creation in the Modern Economy
[13] supported
The Bank says the total amount of money created ultimately depends on the central bank's monetary policy, mainly set through interest rates, with asset purchases or quantitative easing as a direct channel.
"The amount of money created in the economy ultimately depends on the monetary policy of the central bank. In normal times, this is carried out by setting interest rates."Money creation in the modern economy - Bank of England
[14] supported
Reserves cannot be lent out directly because only commercial banks hold reserve accounts.
"Nor can reserves be directly lent out, since only commercial banks hold reserves accounts."Bank of England on Money and Money Creation in the Modern Economy
[15] supported
When the Federal Reserve first began paying interest on excess reserves in October 2008, banks had to choose between earning a 'better than' risk-free rate on reserves or lending to earn a higher, riskier rate.
"When the Federal Reserve first paid interest on excess reserves (IOER) in October 2008, banks faced a choice to earn a “better than” risk‐free rate, or lend to earn a higher, riskier rate."Better than risk‐free: Reserve premiums and bank lending (2024)
[16] supported
The thesis finds that the Saudi Central Bank's reserve provision is the key mechanism restoring long-run equilibrium among loans, money and reserves, meaning the central bank accommodates banks' reserve demand after the fact.
"My findings reveal that: (1) The Saudi Central Bank’s reserve provision is the key mechanism in restoring long-run equilibrium among variables, indicating that the central bank accommodates banks’ reserve demand ex post;"The Evolution of Saudi Arabia’s Financial System and Money Supply Endogeneity (2025)
[17] documented
The paper reports that the Fed's March 2020 elimination of reserve requirements did not support bank lending but instead increased US banks' liquidity.
"However, we find empirical evidence that the reserve requirements elimination was not able to support bank lending but instead increased the liquidity of US banks."The impact of eliminating reserve requirements on US banks' lending, liquidity, and profitability during COVID ‐19 (2025)
[18] documented
The authors attribute the post-2008 'reserves-lending puzzle' to a 'reserve premium' (IOER minus three-month Treasury bill rate) rather than reverse causality, flight to safety, or increased Treasury supply, and estimate it reduces domestic bank-level lending by 5.1%.
"Evidence suggests the “reserves‐lending puzzle” is not driven by endogeneity from reverse causality, flight to safety, or increased Treasury supply, but by the introduction of the “reserve premium” (IOER‐3MT), which is associated with a reduction of domestic bank‐level lending by ‐5.1% (‐$420.2B)."Better than risk‐free: Reserve premiums and bank lending (2024)
[19] supported
The article states that minimum reserve requirements do not restrict giro money creation; their purpose is to avoid short-term shortages in obtaining reserves.
"Somit beschränkt die Mindestreserveanforderung die Giralgeldschöpfung nicht, sie dient vielmehr dazu kurzfristige Engpässe bei der Beschaffung von Reserven zu vermeiden."Geldschöpfung
[20] supported
In normal monetary policy the book-money stock is roughly ten times the monetary base, but under quantitative easing the monetary base can rise to over a third of the book-money stock.
"Während einer Phase unkonventioneller Geldpolitik mit quantitativer Lockerung kann der Wert der Geldbasis aber auch auf über ein Drittel des Wertes der Buchgeldmenge ansteigen."Geldschöpfung