That&#x27;s actually not quite correct. The loan itself is an asset to the bank. When you sign the promissory note, they then give you a balance at the bank in the amount of the principal of the note, THAT is the liability.<p>The loan is the asset because that is money coming into the bank. Your deposits are liabilities because that is money you could withdraw from the bank.<p>So it is both a liability and an asset. They don&#x27;t create it out of thin air, they create it out of ink and paper. It&#x27;s a hack of the double-entry bookkeeping system.<p>I recommend Paul Grignon&#x27;s Money As Debt: <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=jqvKjsIxT_8" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=jqvKjsIxT_8</a>