That's a misunderstanding - when a bank originates a loan:
- the bank records an asset (the loan) and a liability (the deposit in the borrower's account)
- the borrower records an asset (the loan money now deposited at the bank) and a liability (the loan)
- the bank records an asset (the loan) and a liability (the deposit in the borrower's account) - the borrower records an asset (the loan money now deposited at the bank) and a liability (the loan)
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
At this point the money literally came out of thin air, there's more total currency in the system then there was before.
It might seem like an irrelevant nuance but it's pretty important to understanding how the money supply works