Note: Loanable funds:
“The activity of the banks as negotiators of credit is characterized by the lending of other people's, that is, of borrowed, money. Banks borrow money in order to lend it; … Banking is negotiation between granters of credit and grantees of credit. Only those who lend the money of others are bankers; those who merely lend their own capital are capitalists, but not bankers.” -p. 294f
Mixed in with Credit Creation: “...those banks that issue notes or open current accounts... have a fund from which to grant loans, over and above their own resources and those resources of other people that are at their disposal”
-p. 304
Full Werner (2015) quote:
The financial intermediation theory of banking is publicised by high- ly ranked economics journals, and also includes some well-known economists. Examples are Keynes (1936); Gurley and Shaw (1955); Tobin (1963, 1969); Sealey and Lindley (1977); Diamond and Dybvig (1983); Baltensperger (1980); Diamond (1984, 1991, 1997); Eatwell, Milgate, and Newman (1989); Gorton and Pennacchi (1990); Bencivenga and Smith (1991); Bernanke and Gertler (1995), Rajan (1998), Myers and Rajan (1998), Allen and Gale (2004a, 2004b); Allen and Santomero (2001); Diamond and Rajan (2001); Kashyap, Rajan, and Stein (2002); Matthews and Thompson (2005); Casu and Girardone (2006); Dewatripont et al. (2010); Gertler and Kiyotaki (2011) and Stein (2014). Earlier proponents of this theory include von Mises (1912), who wrote: “The activity of the banks as negotiators of credit is characterised by the lending of other people's, that is, of borrowed, money. Banks bor- row money in order to lend it; ... Banking is negotiation between granters of credit and grantees of credit. Only those who lend the money of others are bankers; those who merely lend their own cap- ital are capitalists, but not bankers”
Von Mises also pointed out that “...those banks that issue notes or open current accounts... have a fund from which to grant loans, over and above their own resources and those resources of other people that are at their disposal” (Mises, 1980, p. 304). Mises (1912) thought that banks could act either as financial intermediaries, in which case they would not create money, or at times stop being financial intermediaries and function as creators of credit and money. How this should be reflected in terms of bank accounting re- mains unclear and doubtful. This line of thinking may, on a high level, however have prepared the ground for the idea that banks could be financial intermediaries on the one hand and on the other, somehow, create money — a position that the fractional reserve theory maintains.