I'm an expert in the field of economics and finance, and I'm here to provide you with a detailed explanation on the role of banks and the creation of money.

Money in our modern economy is not simply printed by a central authority and then distributed. Instead, it's a complex system that involves both the government and commercial banks. Let's delve into how this process works.

The Role of Central Banks:
Central banks play a crucial role in the money creation process. They are responsible for setting monetary policy, which includes controlling the money supply. Central banks have the authority to print physical currency, which is the most tangible form of money. This currency, however, represents only a small fraction of the total money supply.

The Creation of Deposit Money:
The majority of money in circulation today is not physical currency but rather deposit money, which is created through the lending activities of commercial banks. When a bank makes a loan, it essentially creates a deposit in the borrower's bank account. This deposit is new money that did not exist before the loan was made.

The Fractional Reserve Banking System:
Banks operate under a fractional reserve banking system, which means they are only required to hold a fraction of their deposits in reserve. The rest can be lent out. This allows for a multiplier effect where the initial deposit can lead to the creation of several times that amount in new deposits through the process of lending and repayment.

The Role of Government:
While banks are the primary creators of money through lending, the government also plays a role. It does this by issuing government bonds, which are purchased by central banks as part of their monetary policy operations. This process can increase the money supply indirectly.

The 97% vs. 3% Myth:
The statement that "97% of the money in the economy today is created by banks, while just 3% is created by the government" is a common one but requires clarification. It seems to refer to the proportion of money that is in the form of bank deposits versus physical currency. However, this is a simplification. The actual creation of money is a collaborative process between banks, central banks, and the government, with each playing a part in the overall money supply.

Regulation and Control:
It's also important to note that the creation of money by banks is not an unregulated process. Central banks and other regulatory bodies monitor and control the money supply to ensure stability and prevent issues such as inflation or deflation.

In conclusion, banks do not "print" money in the traditional sense, but they are instrumental in the creation of money through the extension of credit and the creation of bank deposits. This process is intricately linked with the actions of central banks and government policies, and it is subject to regulatory oversight to maintain economic stability.

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Most of the money in our economy is created by banks, in the form of bank deposits -C the numbers that appear in your account. Banks create new money whenever they make loans. 97% of the money in the economy today is created by banks, whilst just 3% is created by the government.read more >>