Bank Balances Are Just Fancy Numbers

I want you to log into your banking app right now, mid-sentence, before you finish reading this paragraph. Look at the balance. That number feels like proof, like a locked box with your name stenciled on the side.

I believed that too, for longer than I'd like to admit. It's wrong. That figure is an IOU, and your bank generated it about five seconds after a total stranger asked for a loan you'll never hear about.

Here's the version most of us were taught, the one I grew up believing without ever once questioning it: you deposit RM10,000, the bank sets RM10,000 aside, then lends out whatever's left after keeping a small reserve. Neat. Reassuring. Also wrong, and once you see why, you can't really unsee it.

How a signature turns into money

I first ran into the real mechanism a few years ago, buried in a central bank paper I almost closed out of after the second paragraph. Boring title, dense prose, the kind of document that looks like it was written specifically to be ignored. In 2014, the Bank of England published a paper called "Money creation in the modern economy." Not a blogger. Not a YouTuber. The actual central bank of the United Kingdom, stating in plain language that banks "do not act simply as intermediaries, lending out deposits that savers place with them."

When a bank approves a loan, it creates a brand-new deposit and drops it straight into the borrower's account. The loan and the deposit appear at the exact same moment, born from the same signature. Nobody's savings moved, because nobody's savings were involved in the first place.

I remember sitting with that for a good ten minutes, rereading the same paragraph, waiting for the catch. There wasn't one. The money didn't come from you. It came from a keystroke, and that keystroke happens whether or not you were ever in the room.

The leash got looser, not tighter

Here's where it gets uncomfortable for anyone banking in Malaysia specifically, and I say this as someone who banks with a local institution too, so I'm not writing this from some outside perch. Banks are required to hold back a small percentage of deposits as a legal minimum, called the Statutory Reserve Requirement. In May 2025, Bank Negara Malaysia cut that requirement to 1%, the lowest it's been in 14 years, releasing roughly RM19 billion of liquidity straight into the banking system.

I'll be straight with you: I didn't clock that number until I went digging for this piece. A drop from 2% to 1% doesn't sound dramatic until you say it out loud as "the legal minimum just got cut in half," and almost nobody I've talked to about this had heard about it at all.

Why this actually matters to you, not just to economists

This changes three things about how you should actually behave with money, starting today, not next quarter.

Call a low-interest savings account "safe" one more time and see how that ages. It carries the same system-wide leverage as everything else, just with none of the upside. Banks create money by lending, lending gets easier when reserve requirements drop, and easier lending means credit expands. Expanding credit is a direct driver of asset price inflation, which is a big part of why property, equities, and even gold in Ringgit terms have been running hot this year. You're not imagining that everything costs more. You're watching the mechanism move in real time, and honestly, once you know what you're looking at, it's hard to look away.

Do this in the next 24 hours

I'm not going to end this with "reflect on your relationship with money" or some other line that lets you close the tab feeling thoughtful and do nothing. Here's what I actually want you to do, in order, starting today:

1. Open your bank app right now and screenshot your account balance. This costs you nothing and takes ten seconds. No excuse, I mean it.
2. Search "[your bank name] loan-to-deposit ratio" and find the actual number. Every listed bank publishes this. You'll see exactly how much of "your" deposits have already gone out the door as loans to someone else.
3. Move any cash sitting beyond your 3-6 month emergency buffer. If it's not doing a job, earning yield, sitting in an asset, working as a deliberate short-term reserve, it's just idle capital in a system built to keep moving for everyone except you.
4. Pick one asset class you don't currently understand. Property leverage, EPF's investment scheme, index funds, whatever's closest to your current knowledge gap. Read one primary source on it this week. Not a TikTok summary, not my summary either, actually go to the source.
5. Stop calling your bank balance "savings" in your own head. Call it what it is: capital sitting inside a system designed to multiply for the institution holding it, not for you. That mental shift alone will change how urgently you act on steps one through four.

You can't opt out of this system. Everyone banks somewhere, myself included. But there's a real gap between the person who understands the mechanism and moves accordingly, and the person still treating their bank balance like a locked box with their name on it.

If you want the rest of how this system actually runs, not the version taught in school but the version that shows you exactly where the leverage sits and how to stand on the right side of it, that's what I built Ascendant Collective for. I am not here to be the fairy godmother. No sugarcoating, just the parts of the system nobody bothered explaining to you.