Bank credit

Bank credit is used here to describe all other forms of non-government money. Banks and credit card companies create bank deposits (bank IOUs or credit money) when they issue loans, mortgages, or process credit card payments. They remove deposits (delete credit money) each time a loan or credit card is repaid. Bank credit is usually denominated in the national currency unit (e.g. dollars or yen) and exchangeable at par to the government's currency.