Banks “create” money from lending every day. Bank loan USD100M at 10% interest and will get USD110M, the bank has created USD10MM even though the bank do not see that money initially PPP´s exist to “create” money and money is created by creating debt.
The PPP market is no longer limited by governments and medium term notes but also industrial companies and banks can issue their own debt instruments such as Medium term notes (MTN´s) Negotiable debt securities with an interest rate. They are issued by governments and companies in international debt markets to finance their medium and long-term capital needs, Bank Guaranties (BG), and Stand-By Letters of Credit (SBLC). PPP´s involve trading with discounted bank issued debt instruments, money is created due to the fact that such instruments are deferred payment obligations, or debts (example: an individual, company or organization needs USD100M. And generates a debt note for USD120M that matures after 1 year, and sells this debt note for USD100M, the buyer must believe that the lender is financially strong to pay the debt note upon maturity. This process is known as “discounting”.