The Money Creation Process Made Possible by Fractional-Reserve Banking Is Not Financial Intermediation; It Is a Credit Creation Process

Money is a present good. As argued by Cochran and Call (1998),

Money is the medium of exchange and is thus the present good par excellence. The implied household decision tree is: a. Present goods or future goods (save)? b. If present goods, specific consumption goods or money? Saving is the sacrifice of present goods (a claim on present goods is temporarily foregone) for a claim on future goods. Since the holding of cash balances, whether in the form of deposits or currency, does not require the sacrifice of present utility, changes in cash balances financed from current income are not a part of saving, but represent part of the allocation of income to provide present utility.

Thus the proper economic interpretation of a deposit is that of a warehouse receipt. A deposit is a claim instrument, not a credit instrument. A bank deposit (redeemable at par on demand) is not a debt transaction. It is a bailment in its economic impact even if it is treated as a debt by the legal system. The money creation process made possible by fractional-reserve banking is not financial intermediation. It does not facilitate the transfer of savings to investors. Instead fractional-reserve banking and the associated money-creation process is a credit-creation process. 

--John P. Cochran, Steven T. Call, and Fred R. Glahe, "Credit Creation or Financial Intermediation? Fractional-Reserve Banking in a Growing Economy," Quarterly Journal of Austrian Economics 2, no. 3 (Fall 1999): 54-55.