simondav wrote:Because to

As an attempt to explain the Coop Banks's current difficulties, this is upside down and back-to-front. As if the function of banks was to "create money"  rather than make loans. Also, of course, because you define bank loans as money all you saying here is that to make a loan banks have to have someone to lend to. Which is rather obvious.

I don't know why you make this assumption, but for this explanation of the Coop Bank's difficulty to be true it would require the additional assumption that this wasn't balanced by loans made by other banks not ending up with the Coop. In any event you are conceding that a bank can only lend what it has got or at least can get very quickly (literally by the end of the day, when banks clear their debts to each other via the Bank of England and the money market).It looks as if the Coop Bank's difficulty has arisen from "loan repayments" being less than expected, i.e some of their loans not being repaid in full or on time. I would think that there are many businesses and people who would love to have a loan from the Coop Bank. The trouble seems to be that it is having to use the funds it has to increase its capital rather than to make loans.