they have to buy banknotes from the central bank and there is a "reserve ratio" which determines the ratio of how many "banknotes" they own and what they can create.
More or less.
What people tend to forget is banks are just "middlemen" - they are a mechanism to facilitate trade and not much else.
More or less.
What people tend to forget is banks are just "middlemen" - they are a mechanism to facilitate trade and not much else.