Sort of true in principal - if no one has faith in their currency then it will have no value and no one will use it. But as long as some people value it, and banks have the magical power to fraudulently create customer deposits out of thin air, it’s pretty easy for a few banks to collude and crea...

They require too little deposits to create that much credit. Instead of limiting loans based on deposits, regulators require banks to hold a certain amount of actual shareholder money (capital) to protect against bad loans. For example, under the globally standardized Basel III framework, banks ty...