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

Banks have balance sheets which are scrutinized heavily both internally, externally (third party auditors), and their regulating bodies.

You can likely fudge it but someone will chase you down because you can’t make up money from thin air despite what others are mentioning.