Money creation in the banking system A fractional reserve banking system creates money, but it doesn't create wealth: bank loans give borrowers some new money and an equal amount of new debt. Return CHAPTER 18 Money Supply and Money Demand slide 12 CHAPTER 18 Money Supply and Money Demand slide 12 Money creation in the banking system A fractional reserve banking system creates money, but it doesn’t create wealth: bank loans give borrowers some new money and an equal amount of new debt. Return 1