When you transfer money from one bank to another, are they just moving virtual bits around? Is anything backing those transfers? What prevents banks from just fudging the bits and “creating” money?

Question

When you transfer money from one bank to another, are they just moving virtual bits around? Is anything backing those transfers? What prevents banks from just fudging the bits and “creating” money?

In: 1559

Answer 1

Imagine the worse part of fudging the bits and creating money. And realize you’re no where even remotely close to how bad it actually is. They do all of that and still end up bankrupt and asking the federal reserve for more printed money.