The ability of banks to absorb deposits and create money is the basis of their development. An economic concept is called "money multiplier". It reflects this kind of money creation of banks.

For a simple example, if the savings deposit of a bank is 654.38+00,000, assuming the deposit reserve ratio is 654.38+00%, then the amount used by the bank for lending is 900,000. These loan users usually pay the loans to others, so those who receive the money will deposit the 900 thousand in the bank and generate 900 thousand new savings again. At this time, the bank will have 90 * 90% loanable loans, that is, 8 1 000 yuan, and this loan of 8 1 000 yuan will also generate corresponding deposits. By analogy, only the initial savings currency of 654,38+0,000 yuan will eventually generate several times its deposit through the bank's deposit and loan mechanism, and this multiple is the "money multiplier" just mentioned.