I understand money is created with issued debt, since the interests do not exist yet.
I don't understand why do you say money is destroyed when interest are repaid? If the bank now holds that money, why do you say it is destroyed?
The concept of fractional reserve lending just means that banks are allowed to issue new money to make loans.
But the concept isn't really accurate anymore anyways, banks aren't limited in how much money they can create based on a percentage of their asset portfolio but instead based on complex loan qualification rules.
the opposite happens when you buy a government security or a corporate bond, except you had to get that cash from someone else, not create it on your own.
it gets really weird when you borrow money to buy more money.
Corporate debt is basically exactly what you described... and I assume by 'government security' you mean debt, in which case I have more bad news for you. It's all based on faith in the legal system to enforce debt obligations.
The system itself is actually quite elegant and has functioned very well over decades and a wide variety of market conditions.
Remember despite new money being created now in loan issuance the aggregate supply is shrinking so it's silly to look solely at issuances and say they're 'out of thin air' when the system is actually reducing the supply. Look at the whole thing, not one slice.
Basel III utilizes complex risk formulas tied to specific asset classes for the basis of qualification and capital-based reserves which include stock market exposure (capitalization) counted as part of supplying part of their reserves.
Also, long-term issued debt (bonds) value reporting becomes fixed if they elect to hold them to maturity, with no further reporting needed (at least as far as I've been informed). This was one of the findings from Signature and a number of other banks.
The closest financial structure that describes the banking system is a government granted Ponzi scheme that's limited by rules set by unelected private institutions (Fed/FOMC).
Bubble pressures eventually cause an economic calculation problem which manifests in shortages.
fourier, fundamentally the quoted statement is wrong except in a very narrow niche. Its a overgeneralization that ignores core principles.
There's no real way to clarify this in the span of a single post, there's a lot of fundamental material you need to be aware of.
I'd instead refer you to a very solid book by David Graeber called Debt, The first 5,000 years; and then The Wealth of Nations & The Wealth and Poverty of Nations, for a more broad economic understanding (when things actually worked).
Following those two, Bridgewater's Report (Ray Dalio) Big Debt Crises will give you sufficient background to understand what they are talking about and realize its just a narrow niche that ignores the forest for the trees. There are people that believe you can borrow from the future indefinitely with debt, and the price never comes due; Modern Monetary Theory is one such dogmatic approach and it ignores important distinctions about who decides what in trade, and also unfortunately many places reuse language in a completely different unrelated context which itself is misleading and corruptive.
Start with the question, "What is money, what is it used for, and what requirements does it have to have, to be money".
That niche being money and banking [1]. The comment you dismiss is correct: “Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.”
[1] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...