The answer is YES. And that's the great banking secret. Every cent in circulation was created by a private bank. In technospeak, this process is called balance-sheet extension.
This mechanism is independent of the reserves doled out by central banks. It applies to both cash and electronic money. (The cash simply follows a different path.) Money is created when we pay by credit card or when we take out a loan.
From the Swiss National Bank's official glossary: "Money creation: The banks create new money by granting loans."
The entry goes on to mention minimum reserves and implies that it can steer the money supply. However, when recently asked whether this was really the case, it refused to comment.
"When banks extend loans to their customers, they create money by crediting their customers’ accounts." (Sir Mervyn King, former Governor of the Bank of England)
"The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending." (Martin Wolf, chief economics commentator of the Financial Times)
"The financial crisis of 2007/08 occurred because we failed to constrain the private financial system’s creation of private credit and money." (Lord Adair Turner, head British FSA, a regulator)
"By far the largest role in creating broad money is played by the banking sector… When banks make loans they create additional deposits for those that have borrowed the money." (Paper published by the Bank of England)
"Even before the crisis banks enjoyed various kinds of state support, including the effective right to create money." (Independent Commission on Banking Interim Report)
"Under the present system banks do not have to wait for depositors to appear and make funds available before they can on-lend, or intermediate, those funds. Rather, they create their own funds, deposits, in the act of lending. This fact can be veriﬁed in the description of the money creation system in many central bank statements, and it is obvious to anybody who has ever lent money and created the resulting book entries." (IMF Working Paper Chicago Plan Revisited, p9)
"In the real world, banks extend credit, creating deposits in the process, and look for the reserves later." (Alan Holmes, Senior Vice President, Federal Reserve Bank of NY, 1969)
"Banks lend by simultaneously creating a loan asset and a deposit liability on their balance sheet. That is why it is called credit »creation« – credit is created literally out of thin air (or with the stroke of a keyboard). The loan is not created out of reserves. And the loan is not created out of deposits: Loans create deposits, not the other way around. Then the deposits need a certain amount of reserves to be held against them, and the central bank supplies them." (Standard & Poor's, Repeat After Me: Banks Cannot And Do Not "Lend Out" Reserves, p7)
Question: Is this "creation of money" not just the "money multiplier"?
Short answer: NO! Long answer: "There is no evidence that either the monetary base or M1 leads the [credit] cycle, although some economists still believe this monetary myth. Both the monetary base and M1 series are generally procyclical and, if anything, the monetary base lags the [credit] cycle slightly." (Nobel prize winners Finn Kydland and Ed Prescott, Federal Reserve bank of Minneapolis)
Thank you to Positive Money for collecting these quotes and for letting us link their texts!
One must also acknowledge Prof. Richard Werner's contribution over the decades — in his work for Japan's central bank (see documentary "Princes of Yen") or his empirical study "Can banks individually create money out of nothing? — The theories and the empirical evidence".