Why Commercial banks are called creators of money?

Indian Economy Multiple Choice Questions (MCQs) for State and UPSC Civil Services Examinations. Objective Questions on Indian Economy for competitive examinations.............

And, creation of money or credit refers to the multiplication of loans and advances. As ‘every loan creates a deposit’, credit creation by commercial banks refers to the multiplication of original bank deposits. Thus, “Banks are not merely purveyors of money, but also, in an important sense, manufacturers of money.”