Definition ∞ Bank money refers to the digital funds held by individuals and businesses in commercial bank accounts. This form of money represents liabilities of commercial banks to their depositors, created through lending and deposit-taking activities. It exists primarily as electronic entries on bank ledgers rather than physical currency. Bank money constitutes the vast majority of the money supply in modern economies, facilitating most non-cash transactions.
Context ∞ The role of bank money is frequently discussed in comparison to central bank digital currencies and private digital assets. A key debate involves the potential for digital assets to alter the traditional banking system and the creation of money. Regulatory bodies are examining how to maintain financial stability and consumer protection as digital alternatives to bank money gain traction.
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