Comment by darawk

Creating bank reserves absolutely creates money. Bank reserves are the fulcrum around which bank leverage ratios operate. Yes, they can margin treasuries to borrow reserves from other banks, and in that sense, they are fungible. But the total amount of bank reserves in the system at any one time is still what bounds the total amount of money creation that can happen via leverage. Increasing the absolute amount of bank reserves increases the money supply, by a factor roughly equal to the current reserve requirement ratio (up to demand for credit, etc, etc.).