It is a question of

It is a question of definition in the end. No serious person thinks banks can create money out of thin air, certainly not bankers themselves. If you define a bank loan as money, then of course banks "create money" but not out of thin air. It's, as the ECB says, out of "private credit".The other confusing definition is that of a "bank deposit". Originally, this meant money deposited in a bank from outside. Now it is also used for the bank deposit a bank creates for someone they make a loan to and into which they put the money that is being loaned. So the two are confused although they are quite different, leading to double counting since some of the money banks lend will come from what has been deposited with them.Also of course, banks don't just lend what has been deposited with them from outside, but also from what they themselves borrow from the money market. Both are "private credit" and in fact a distinction between them is made in the official literature, the former being called "retail funding" for the bank's lending activities and the latter "wholesale funding". High Street banks and Building Societies are typically funded more by customer deposits than wholesale funding. In fact it was over-doing the more risky (because the interest rate can suddenly increase) wholesale funding that did for Northern Rock and HBOS.In making a loan banks are using existing money to extend credit not "creating [new] money". If someone wants to call this "creating money" they shouldn't imagine that this is the same as when the State "creates" fiat money. If we are going to have to live with this definition I like the ECB distinction between "outside" and "inside" money.