nostr:npub1ly26mcp4r2yxs9fcsacegyxn6tu8pat7hlxlnk8fc2z573swk8qqlqp3k0 

it can exist on both sides of the balance sheet (as an accounting identity) - it is both a liability (in that the money has to be paid out) and an asset (because it is generating an income from repayments.

So as long as banks can find willing (and relatively safe lenders), the two sides of the balance sheet cancel out, meaning they can issue more & more loans without worrying about capital sufficiency.

Its only when people stop paying the accounting identity fails 2/2 - but 1 more