Do commercial banks create money when they make loans?

Yes. In the UK and euro area, commercial banks can create money in the form of bank deposits when they lend. Crediting a borrower's account creates a spendable deposit alongside a corresponding loan obligation.

The Bank of England explains this using a loan credited to a customer's account. Germany's Bundesbank independently describes the same mechanism and rejects the idea that banks merely lend out money previously deposited by other customers.

This does not mean banks can lend without limits or create free wealth. They face capital, funding, liquidity and profitability constraints, while demand for loans and central-bank policy also matter. Creating a customer deposit is different from creating central-bank reserves.