Parent & Teacher Guide

Prepare the Activity

Suggested level: Ages 13–18, introductory. Learners need basic reading and division. Percentage work is optional. One adult and one learner can complete either route.

Time: Allow 5–10 minutes to prepare and about 15 minutes for one core activity and discussion. Add 5–10 minutes for the short assessment or the paper activity’s third round and percentage calculations. Allow viewing and reading time separately, followed by 15–20 minutes for the documentary worksheet.

Online route: Open the Cantillon Effect Simulator before teaching. Use student pages 1 and 4, an internet-connected device, and a pencil.

Paper route: Use student pages 2–4, pencils, and scrap paper. Read the role cards or print page 3 single-sided to cut them out. No real money is needed.

Curriculum connection: Monetary Policy, Lesson 5: The Nature of Money Creation – Cantillon Effect. Pack 01 explains loan-created deposits; Pack 02 explains the deposit as a bank obligation; Pack 03 introduces definitions and purchasing power.

The 15-Minute Session

Predict, Compare, and Explain

0–2 minutes · Make a prediction.
Ask whether changing who receives currency first could change the outcome. Record a reason.

2–4 minutes · Introduce the activity.
Read the short explanation above, then introduce your chosen simulator or paper activity.

4–9 minutes · Run the comparison.
Compare the two simulator pathways OR complete the first two paper rounds.

9–13 minutes · Discuss the three questions.
Connect receipt order to spending opportunities, price changes, and income timing.

13–15 minutes · Complete the exit sentence.
Revisit the prediction and name one condition that could change the result.

Online Student Activity

Same Amount. Different Entry Points.

Use page 1 of the Student Worksheets PDF, or draw a comparison table on paper.

Model check: The bars represent simulated relative pressure. They are not measured inflation rates or forecasts. The “Fed” arrows are schematic; they do not mean every commercial bank loan begins with fresh central-bank money or that every government payment creates new money.

Paper Student Activity

Who Can Buy What?

The fictional market: The shop starts each round with 20 identical notebooks. Buyers A and B each receive $20, at different times. The first buyer pays $4 per notebook; the second pays $5. Both spend all $20. There is enough stock for both.

Important: These numbers and the price change are invented. The allocations isolate timing; their funding is not modeled. They do not stand for a completed wage payment, asset sale, or bank loan.

Round 1: Give A $20. A buys at $4. Change the price to $5. Then give B $20; B buys at $5. Record both purchases, total shop receipts, and stock left.

Round 2: Reset both buyers’ balances, shop receipts, and all 20 notebooks. Reverse the order: B receives and spends first at $4; A receives and spends second at $5.

Optional Round 3: Reset again. A receives and spends before B, but keep the price at $4 for both. Each still receives $20. Does timing produce a purchasing advantage now?

Calculation: Notebooks bought = dollars available ÷ price per notebook. Use the table on student page 2.

For one learner: The adult calls the turns and acts as shopkeeper. The learner records both buyers. The household labels are roles, not fixed predictions: real people can own assets and earn wages.

Optional arithmetic: Calculate the percentage price rise from $4 to $5 and the percentage fall in what the same $20 buys. Why do the percentages differ?

Optional Assessment · 5–10 Minutes

Check Your Understanding

A. In your activity, what variable did you change and what new amount did you hold constant?

B. If both paper buyers receive $20 and both pay $4 per notebook, how many can each buy? Is there a timing advantage here?

C. A bank creates a $20 deposit by lending to a borrower. Does the borrower receive a debt-free gift? Explain.

D. Name one real-world observation you would need before claiming that a simulator result explains an actual historical event.

Documentary & Extended Learning

Watch, Compare, and Investigate

Watch: Hidden Secrets of Money, Episode 4: The IOU Machine – How Currency Is Created. Preview the film before teaching. Assign the full film or a checked excerpt; allow viewing time separately from the short lesson.

Compare: Read the opening explanation in the Bank of England’s Money Creation in the Modern Economy alongside Pack 01. Compare how the sources explain a bank loan and the creation of a deposit.

Read: In the second post of Nominal Confusion, read “What Is Nominal Confusion?” and “Wages”. Connect the difference between a dollar wage and its purchasing power to the timing question.

Use student page 5 and allow 15–20 minutes after viewing and reading:

1. Film claim: Paraphrase one claim about currency creation or who benefits. Record actual start and end timestamps.

2. Lending check: What does the film suggest happens when a bank lends? Compare this with the Bank of England explanation and Pack 01.

3. Evidence check: What observation, record, or comparison could support or challenge your selected claim? Distinguish an illustration from evidence.

4. Reading application: If living costs rise before wages, why might a later pay rise still leave a household buying less?

5. Your conclusion: What would you now explain differently? Name one unresolved question.

Historical extension: Read Cantillon, Part II, Chapter VI. Identify the early recipients in his mining example and a group whose income adjusts later. Which steps are argued, and which would require evidence?

Parent & Teacher Answer Guide

Explain the Result and Its Conditions

Simulator: Scenario A begins with “Financial Markets & Asset Buyers” and displays Fed → Markets → Businesses → Households. B begins with “Households Receiving Payments” and displays Fed → Households. The comparison places more early simulated pressure in financial and asset channels in A. Record current labels if the interface changes.

Discussion: Earlier access may allow purchases before some prices rise. Living costs that rise before income can reduce purchasing power. More production or quicker income adjustment can change the outcome. Neither a fixed ranking of winners nor a universal price increase follows from this activity.

Assessment: A: online, the entry pathway changes while the amount stays $100 billion and speed stays Medium; on paper, receipt order changes while each buyer still gets $20. B: 5 notebooks each, with no purchasing advantage from timing here. C: the borrower also owes repayment. D: accept a relevant dated record, such as payments, prices, wages, or output, with an explanation of how it would test the claim. The teacher PDF includes an optional 8-point marking guide.

Film and reading: Look for an accurately located claim, a specific source comparison, testable evidence, and a conclusion that states its conditions. A pay rise smaller than the rise in living costs can leave purchasing power lower. Optional calculation: a 4% wage rise alongside a 5% basket-price rise gives 1.04 ÷ 1.05 − 1, approximately −0.95%.

Teaching precision: Bank lending creates a deposit and a repayment obligation; it does not simply transfer an existing customer deposit to the borrower. Lending remains constrained. Receiving a loan is not a debt-free gift, and an asset seller gives up an asset in exchange for payment. Receipt alone does not establish a net-wealth gain. See the Bank of England explanation.

Model limits: The paper price increase is a rule, not proof that new currency always produces that increase. The shop receives the same funds the buyers spend. “Closer” means access and timing, not physical distance.

Definitions: This pack uses “new currency” broadly for newly created purchasing power, including bank deposits. Central-bank sources usually call these balances deposit money; currency often means notes and coins.

Reading & Teaching Support

Connect the Activity to Its Sources

Curriculum: MLMF Lesson 5: The Nature of Money Creation - Cantillon Effect.

Interactive activity: MLMF Cantillon Effect Simulator.

Documentary: Hidden Secrets of Money, Episode 4: The IOU Machine - How Currency Is Created.

Extended reading: Nominal Confusion: Why Rising Prices Do Not Always Mean Rising Value.

Bank lending and deposit creation: Bank of England: Money Creation in the Modern Economy (2014).

Historical argument: Richard Cantillon: Essay on the Nature of Trade in General, Part II, Chapter VI.

For younger learners: Read aloud, accept oral answers, and count notebooks without percentages.

For older learners: Choose a documented episode, define an outcome and period, and consider supply changes and other explanations before attributing the result to the currency’s entry point.

Download & Teach

The Printable Materials

Download the Student Worksheets and Teacher Guide attached to this topic. Both are complete materials for Pack 04; no pages need to be extracted from an earlier packet.

Print only what you need: Online core: student pages 1 and 4. Paper core: pages 2–4. Add page 5 for the viewing and reading extension. Keep teacher answers separate; print role cards single-sided if cutting.

Parent & Teacher Guide

Prepare the Activity

Suggested level: Ages 13–18, introductory. Learners need basic reading and arithmetic. Percentage work is optional.

Time: Allow about 5–10 minutes to prepare. The core session takes around 15 minutes. Add 10–15 minutes for the purchasing-power worksheet. For the documentary extension, allow the full film runtime plus 15–20 minutes for writing and discussion.

Materials: Print pages 1–2 of the Student Worksheets PDF, or read the cards below and write answers on paper. Supply pencils; a calculator is optional. Print single-sided if you want to cut out the cards. No real currency, gold, or account details are needed.

Curriculum connection: Begin with Monetary Policy Lesson 2: Why We Are Confused: Money vs. Currency. Teaching Pack 01 and Teaching Pack 02 provide useful background on deposits, but are not prerequisites.

Use Clear Definitions

What Do We Mean by Money?

The same word can carry different meanings. Explain which definition is being used before asking learners to classify an item.

Compare the Reserve Bank of Australia’s explanation and the Bank of England’s introduction with MLMF Lesson 2. In Pack 01, “bank-created currency” refers to what central-bank sources call deposit money.

Gold used and widely accepted in exchange is an example of commodity money. In a setting where sellers do not accept it directly, a gold holding serves a different role. Metal prices and purchasing power can change; the CFTC and FINRA guide explains the importance of price changes and costs.

The 15-Minute Session

Predict, Compare, and Explain

0–2 minutes · Make a prediction.
Read the fictional market rules below. Ask which card would be easiest to use to buy a $5 notebook and why. Keep the prediction for comparison.

2–4 minutes · Read the four cards.
Read Cards A–D and introduce the three functions. Point out that the debit card accesses the same deposit as Card B.

4–8 minutes · Complete the comparison.
For each card, identify what it is and whether it can pay a stall directly under the stated conditions. Learners can work alone or in pairs.

8–13 minutes · Discuss the three questions.
Compare the pricing unit, the account balance, and purchasing power. Briefly revisit the two uses of “money” in Section 02.

13–15 minutes · Write the exit sentence.
Ask learners to explain the difference between a means of payment and a reliable store of value.

Student Activity

Which One Can You Spend Here?

The fictional market: All prices are in dollars. Every stall accepts cash and bank-account payments. None accepts gold directly. Ignore interest and fees. These conditions are part of the exercise, not a claim about every real-world seller.

Predict: Which card would be easiest to use to buy a $5 notebook here? Explain your choice.

Record for each card: Is it cash, a bank claim, a commodity, or a payment tool? Can it pay a stall directly in this market? Explain how, or identify the extra step needed.

Use the comparison table on page 1 of the Student Worksheets PDF, or make the same record on paper.

Optional Worksheet · 10–15 Minutes

Same Amount. Same Buying Power?

Use page 3 of the Student Worksheets PDF. All numbers are invented; they are not historical prices or forecasts. The basket contains exactly the same goods at both dates. Ignore interest, fees, taxes, and selling costs. Treat each example separately.

Earlier: One basket costs $5.
Later: The identical basket costs $6.25.
Calculation: Divide the dollar amount available by the price of one basket.

Stretch question: The basket price rose 25%. Did the $100 balance lose 25% of its buying power? Compare the change in baskets with the original number of baskets.

Extended reading: In the second post of Nominal Confusion, read “What Is Nominal Confusion?” Explain how the numerical exercise illustrates the difference between a dollar amount and what it buys.

Documentary & Extended Learning

Watch, Compare, and Investigate

Watch: Hidden Secrets of Money, Episode 1: Money vs. Currency - The Hidden Difference. Preview it before teaching. Allow the full film runtime separately from the 15-minute core, then 15–20 minutes for the viewing worksheet and discussion.

1. Explain the film’s distinction.
What extra quality does it use to distinguish money from currency? Describe the idea in your own words and record a timestamp.

2. Compare the definitions.
Read the opening definition and the section “What forms of money are used in a modern economy?” in RBA: What Is Money?. Compare this with MLMF Lesson 2. How are cash and bank deposits classified? Is the difference about definitions, observable facts, or both?

3. Check a claim about preserving value.
Choose a claim from the film or lesson. What dates, goods or price measure, and evidence would help test it? Would holding or selling costs affect the result?

4. Change the setting.
Imagine a market where gold pieces are widely accepted and prices are quoted in grams of gold. Which functions would gold serve there that it did not serve directly in the first market?

5. Write a careful conclusion.
Finish: “Using ______’s definition, I would call ______ money because …” Then name one question that the evidence has not answered.

Read further: What Is Sound Money? and the Bank of England’s introduction to money. Discuss how a definition, a historical observation, and a prediction require different kinds of support.

Parent & Teacher Answer Guide

Check the Reasoning

Prediction: A, B, or D is acceptable if the learner explains how that payment works. “Easiest” depends on circumstances. C requires a further exchange in this market.

Card A: Physical cash; accepted directly.
Card B: A bank deposit, which is a claim on the bank; usable through a transfer.
Card C: A commodity holding; sell or exchange it before paying these stalls.
Card D: A payment tool accessing B’s deposit; it does not add another $20.

Discussion 1: Dollars are the unit of account because prices are quoted in dollars.
Discussion 2: B and D give access to $20 altogether.
Discussion 3: Acceptance today does not establish stable purchasing power later.

Sample exit: “A means of payment lets me complete a purchase; a reliable store of value helps preserve what I can buy later. The first does not guarantee the second.”

Purchasing-power answers: Cash and the deposit each buy 20 baskets earlier and 16 later, a loss of 4 baskets. The gold example buys 20 baskets at both dates: $100 ÷ $5 = 20 and $125 ÷ $6.25 = 20. At the alternative $75 sale price, it buys 12 baskets.

Stretch answer: The price rises 25%, but the $100 amount loses 20% of its basket-buying power: 4 fewer baskets divided by the original 20. The percentages use different starting quantities.

Documentary answers: Look for the emphasis on preserving value over time, a correct account of the RBA’s classification, and a testable claim with a period and purchasing-power measure. Accept different conclusions when the definition and reasoning are clear.

The second market: Gold would serve directly as a medium of exchange, and grams of gold as the unit of account. Whether it preserves purchasing power reliably still needs evidence.

Teaching precision: Physical durability is different from purchasing-power stability. Metal prices can rise or fall; a favorable historical interval does not prove “always.” Judge the stated definition and evidence rather than requiring a particular slogan.

Reading & Teaching Support

Connect the Activity to Its Sources

Curriculum: Monetary Policy, Lesson 2: Why We Are Confused: Money vs. Currency and Monetary Policy, Lesson 3: What Is Sound Money?.

Documentary: Hidden Secrets of Money, Episode 1: Money vs. Currency - The Hidden Difference.

Extended reading: Nominal Confusion: Why Rising Prices Do Not Always Mean Rising Value.

Definitions and modern forms: Reserve Bank of Australia: What Is Money? and Bank of England: Money in the Modern Economy - An Introduction.

Functions and inflation: Federal Reserve Bank of St. Louis: Money and Inflation - A Functional Relationship.

Price variability and costs: CFTC and FINRA: 10 Things to Ask Before Buying Physical Gold, Silver, or Other Metals.

For younger learners: Read the cards aloud, accept oral answers, and use a $20 balance with basket prices of $2 and $2.50. The results are 10 and 8 baskets; percentage work can wait.

For older learners: Compare two documented historical periods. State the selected dates and price measure, account for relevant costs, and explain what the results do and do not establish.

Download & Teach

The Printable Materials

Download the two PDFs attached to this topic. Both include the materials needed for this pack; you do not need to extract worksheets from an earlier packet.

For the short session: Print student pages 1–2. Keep the teacher answers separate. Print single-sided if cutting out the cards. Add pages 3–4 when you are ready for the extended activities.

Parent & Teacher Guide

Prepare the Activity

Suggested level: Ages 13–18, introductory. Learners need basic addition and subtraction. Use this as homeschool material, classroom enrichment, a summer learning session, or a small-group activity.

Time: Allow about five minutes to prepare before teaching. The core activity takes approximately 15 minutes. The extended option below brings the session to approximately 60 minutes.

Materials: Paper, a pencil, the student worksheet, and one shared screen with the Commercial Bank Credit Creation Simulator. A calculator is optional. A paper alternative is included below.

Curriculum preparation: Read Banking Fundamentals Lesson 1: Your Bank Deposit Is Actually a Loan, followed by Lesson 2: Whose Money Is the Bank Lending? Open the simulator and practise creating one loan before the session.

The scenario: A repair business borrows $50,000 to buy equipment. Its bank credits a new deposit account. The business has not yet spent the deposit.

Track only this transaction, ignoring fees and interest. The zero starting entries refer to this new transaction, not the bank’s entire balance sheet.

The 15-Minute Session

Predict, Observe, and Explain

0–2 minutes · Make a prediction.
Ask: “Where will the $50,000 in the account come from?” Have learners write their prediction before explaining the answer. Introduce an asset as something owned or owed to you, and a liability as something you owe.

2–6 minutes · Create one loan.
Open the simulator and select Reset Simulation. Set Loan Amount to $50,000 and Credit Destination to Productive Investment. Select Create Commercial Loan once. Read the loan and deposit entries aloud.

6–8 minutes · Record what changed.
Complete the four records in the student activity below. Compare the new deposit with Existing Deposits Moved and Vault Cash Moved. Ask learners whether their original prediction needs to change.

8–14 minutes · Discuss the three questions.
Allow roughly two minutes per question. Work out the principal repayment in Question 3 on paper; the activity does not require a repayment control in the simulator.

14–15 minutes · Complete the exit sentence.
Ask learners to finish the sentence independently. Check whether they identify the new deposit and the borrower’s debt.

Keep the demonstration focused: The simulator’s asset-pressure and productive-growth percentages are illustrative model outputs. Use its accounting entries for this lesson. Those percentages are not measured effects or forecasts.

Teach it without a screen: Draw two records labeled “Bank” and “Borrower.” Add the entries below, then record $0 for existing deposits moved and $0 for vault cash moved. Ask the learner to explain each entry before completing the worksheet.

Student Worksheet

Follow a Newly Created Loan

Write your answers on paper or use page 3 of the printable packet.

A repair business borrows $50,000. Its bank credits the business’s account. The business has not yet spent the deposit. Record only this new transaction, leaving out interest and fees.

First, predict: Where do you think the new account balance comes from?

Then, observe: For each record below, write the amount after the bank creates the loan. Keep your original prediction so you can compare it with the results.

Documentary & Extended Learning

Build a 60-Minute Session

Add guided viewing and a purchasing-power exercise to the short activity. Print pages 3 and 6 of the packet, and open the film and readings before the session.

Check the background first: The documentary’s study notes recommend completing Monetary Policy Lessons 1–6. Use the full-film session after that background, or provide guided support for unfamiliar concepts. You can also spread these activities across several days.

0–15 minutes · Complete the core activity.
Follow the short teaching sequence, including the three discussion questions and exit sentence.

15–37 minutes · Watch with a question in mind.
Watch How Our Monetary System Works, listed at 21 minutes, 17 seconds. Record one claim about bank lending or deposits and its timestamp. Save broader unfamiliar claims as questions for later investigation.

37–45 minutes · Check the claim.
Compare it with Banking Fundamentals Lesson 2 and the opening explanation in the Bank of England’s 2014 article. Identify exactly what the sources support, qualify, or leave unanswered.

45–55 minutes · Apply the idea of purchasing power.
Open Nominal Confusion. In the second post, read the section titled “What Is Nominal Confusion?” Complete the basket example below or on page 6 of the packet.

55–60 minutes · Reflect and choose a next question.
Explain how a spendable balance, a debt, and real purchasing power differ. Use evidence from both activities, then keep one unanswered question for the next lesson.

Student Viewing & Reading Record

Connect the Lesson to the Evidence

Write your answers on paper or use page 6 of the printable packet.

1. Record a documentary claim.
Choose one claim about bank lending or deposits from How Our Monetary System Works. Write it in your own words and note the timestamp.

2. Compare it with a source.
Read the relevant explanation in Whose Money Is the Bank Lending? and the Bank of England article. Identify a passage that supports the claim, limits it, or leaves a question unanswered. Explain your reasoning.

3. Read and calculate.
Read “What Is Nominal Confusion?” in the second post of the Nominal Confusion topic. Then complete this separate, invented example. The contents of each basket stay the same.

Earlier: You have a $100 spending budget. One basket costs $10. How many baskets can you buy?

Later: You have a $120 spending budget. The identical basket now costs $12. How many baskets can you buy?

Compare: Does the larger budget buy more? Show your division or explain in words.

4. Make the connection.
Why are a spendable account balance, a debt, and real purchasing power different things? Use one detail from the loan activity and one from the basket example.

5. Choose your next question.
Write one question you would investigate further. Name a lesson or source that could help you begin.

Parent & Teacher Answer Guide

Check Understanding

Expected observations: After one $50,000 loan, the loan receivable is $50,000 and the new customer deposit is $50,000. Existing deposits moved: $0. Vault cash moved: $0.

Question 1 · Was an existing deposit moved?
No equal deposit was transferred from another customer in this transaction. The bank created the new balance when it recorded the loan. The new $50,000 deposit and the $0 transfer entries distinguish creation from moving an existing balance.

Question 2 · Who owes whom?
The borrower owes the bank $50,000 on the loan. The bank owes the account holder $50,000 on the deposit. The borrower’s added asset and added liability offset at origination, so the loan alone adds $0 to net wealth in this simplified example. The deposit is spendable, but it is not earned income or a gift.

Question 3 · What happens on repayment?
After repaying $10,000 of principal from the unspent deposit to the same bank, the remaining deposit is $40,000 and the remaining loan principal is $40,000. Both the bank’s loan asset and its deposit liability decrease by $10,000. The deposit money used for that principal repayment is extinguished.

Exit sentence: Accept equivalent wording: “The bank creates a new deposit when it lends. The borrower receives a spendable balance and owes the loan principal.”

Documentary comparison: Answers depend on the claim selected. Look for an accurate paraphrase, a timestamp, a relevant source passage, and an explanation of what that passage establishes. A learner can identify an unanswered question without having to settle it immediately.

Purchasing-power example: $100 ÷ $10 = 10 baskets. $120 ÷ $12 = 10 baskets. The budget rises 20%, and the basket price also rises 20%, so the larger budget buys the same quantity. This example holds the basket’s contents constant and does not identify the cause of the price change.

Final reflection: A spendable balance is an asset the holder can use for payments. A debt is an obligation to repay. Purchasing power concerns what a balance can buy. In the loan example, the $50,000 balance comes with a $50,000 debt. In the basket example, a 20% larger budget buys no additional baskets.

Learning check: Mark each outcome as secure or revisit: identifies the new deposit; identifies both obligations; calculates the two $40,000 balances. If needed, repeat the relevant step with a $500 loan and a $100 principal repayment. Assess the explanation and evidence.

Teaching Notes

Keep the Explanation Precise

What “lending what it did not already have” means:
The bank issues a new deposit claim on itself. It creates the spendable balance provided to the borrower. This refers to the newly created deposit; the bank still needs resources to operate and meet its obligations.

Creation and settlement are different tasks:
A payment to another bank creates settlement needs. Banks also face capital and liquidity requirements, funding costs, borrower risk, demand for loans, and profitability considerations. The ability to create deposits does not make lending unlimited.

Keep the forms of money distinct:
This activity follows a loan credited to a deposit account. Physical notes and coins, central-bank reserves, and deposits created through asset purchases require separate explanations.

Separate principal from interest:
The repayment exercise concerns principal only. Interest has different accounting treatment. A one-loan example cannot establish that interest payments always require new borrowing.

Use evidence to extend the lesson:
The central-bank resources below describe their own jurisdictions. This worksheet isolates a shared accounting mechanism. Help learners distinguish an explanation of that mechanism from a policy opinion or a country-specific legal rule.

Sources & Further Reading

Check the Explanation

Use these resources alongside the MLMF curriculum to check the accounting relationships and investigate further questions.

Printable Materials

Use the Curriculum Companion

The seven-page How Bank Lending Creates Currency — Curriculum Companion supplied with this topic contains the printable student worksheets, teaching instructions, answer guide, and source directory.

Use the page numbers below to print the materials needed for your session.

Parent & Teacher Guide

Prepare the Activity

Suggested level: Ages 13–18, introductory. Learners need basic addition and subtraction. The activity can be used at home, in a classroom, during summer learning, or with a small group.

Time: Allow about five minutes to prepare and approximately 15 minutes for the core activity. Schedule the reading and documentary extensions separately.

Materials: Paper, pencils, and ten paper tokens, each labeled $100. Prepare three record sheets labeled Maya, Alex, and Bank.

Curriculum preparation: Read Banking Fundamentals Lesson 1: Your Bank Deposit Is Actually a Loan. If learners have completed the first teaching pack, ask them to recall why a customer deposit appeared on the liability side of the bank’s records.

The scenario: Maya starts with $1,000 in cash. Maya and Alex have ordinary deposit accounts at the same bank, both initially showing $0. Maya deposits the cash, pays Alex $200 through the bank, and then withdraws $100 in cash.

Keep the model clear: Track only the amounts involved in this exercise. The bank’s zero starting entries do not represent an actual bank’s entire balance sheet. Ignore fees, interest, overdrafts, and other transactions.

Student Materials

Choose Your Roles

Copy these instructions onto separate slips of paper, or read them from the screen. One learner can work through every role with an adult. In a group, assign a different person to each role.

The 15-Minute Session

Deposit, Pay, and Withdraw

0–2 minutes · Make a prediction.
Ask: “If Maya deposits $1,000, does the bank owe Maya, does Maya owe the bank, or does nobody owe anything?” Have learners explain their prediction. Introduce creditor and debtor using “is owed” and “owes.”

2–5 minutes · Make the deposit.
Maya hands all ten cash tokens to the bank. The bank records $1,000 in cash and “Owed to Maya: $1,000.” Maya records “Cash: $0” and “Bank deposit: $1,000.” Ask both participants to describe the same deposit from their own perspective.

5–8 minutes · Pay another customer.
Maya instructs the bank to pay Alex $200. Because both customers use the same bank, update the records: reduce the amount owed to Maya by $200 and increase the amount owed to Alex by $200. Leave the cash tokens with the bank.

8–10 minutes · Withdraw cash.
Maya withdraws $100. The bank gives Maya one cash token and reduces the amount owed to Maya by $100. Alex’s balance stays the same. Record the remaining cash and deposits.

10–14 minutes · Discuss the results.
Work through the three discussion questions below. Ask learners to point to the records or tokens that support each answer.

14–15 minutes · Complete the exit sentence.
Let learners finish the sentence independently. Check that they correctly identify the creditor, debtor, asset, and liability.

Student Worksheet

Follow the Bank’s Obligation

Write your answers on paper. Keep a separate record for each stage so you can compare what changed.

Before you begin: Maya has $1,000 in cash. Both customer deposit balances are $0. The bank’s cash tracked in this exercise is $0.

Your prediction: After Maya deposits her cash, who will owe whom? What do you think her account balance will represent?

Record the results: Complete the amounts below as you carry out each stage. At the end, also record how much physical cash Maya holds.

Parent & Teacher Answer Guide

Check Understanding

After the deposit: The bank holds $1,000 in cash and owes Maya $1,000. Alex’s balance is $0. Maya holds no physical cash and has a $1,000 deposit asset.

After the payment: The bank still holds $1,000 in cash. It owes Maya $800 and Alex $200. Its total deposit liability remains $1,000.

After the withdrawal: The bank holds $900 in cash. It owes Maya $700 and Alex $200, for a total deposit liability of $900. Maya now holds $100 in physical cash as well as her $700 deposit.

Question 1 · Who is the creditor?
Maya is the creditor and the bank is the debtor. Maya’s deposit is an asset because it is an amount owed to her. It is the bank’s liability because the bank owes that amount. Maya has not taken out a loan from the bank in this activity.

Question 2 · What changed in the payment?
The bank reduced Maya’s deposit by $200 and increased Alex’s deposit by $200. It changed who was owed that amount. No cash left the bank, and the total amount owed to the two depositors stayed at $1,000.

Question 3 · What did the withdrawal do?
The bank repaid $100 of its obligation to Maya in cash. Maya’s deposit fell from $800 to $700, while her cash rose from $0 to $100. Her cash plus deposit still totaled $800 immediately before and after the withdrawal. Alex’s $200 deposit was unchanged.

Exit sentence: “I am the bank’s creditor because the bank owes me. My deposit is an asset for me and a liability for the bank.” Accept equivalent wording that preserves the relationship.

Learning check: Ask the learner to explain the deposit from both perspectives without looking at the role cards. Then ask them to explain why the payment changed two balances while the withdrawal changed both cash and a deposit.

Teaching Notes

Keep the Relationships Clear

A deposit remains an asset for the customer.
Calling a deposit a loan to the bank does not mean the customer has no property or no repayment rights. The customer holds a claim against the bank, rather than ownership of particular notes identified by the account balance.

This cash deposit changes the form of Maya’s money.
Maya gives up $1,000 in physical cash and receives a $1,000 deposit. Do not count the cash now held inside the bank as additional money still held by Maya. This exchange alone has not doubled the public’s spendable money.

A cash deposit and a newly issued bank loan have different matching assets.
In this activity, the bank receives cash and records a deposit liability. In the first teaching pack, the bank records a new loan asset and a new deposit liability. This paper exercise does not establish that banks must receive an equal cash deposit before lending.

The payment stays within one bank.
That is why the activity changes two customer balances without moving cash between banks. Payments involving another bank introduce settlement requirements that can be investigated separately.

The cash totals describe this exercise.
We have not modeled the bank’s lending, investments, other funding, or other customers. The activity therefore does not show a typical bank’s ratio of cash to deposits.

Creditor status and deposit protection can coexist.
Eligible deposits may be protected by deposit insurance, subject to the rules of the relevant country and scheme. For a United States extension, use the FDIC’s explanation of deposit insurance. Protection does not change the basic accounting relationship taught here.

Curriculum & Extended Learning

Connect the Activity to the Lessons

Read · Banking Fundamentals Lesson 1
Read Your Bank Deposit Is Actually a Loan. Find the explanation of a bank balance as a claim against the bank. Rewrite it in your own words using Maya’s deposit as the example.

Compare · Banking Fundamentals Lesson 2
Continue to Whose Money Is the Bank Lending? Compare a deposit created after a cash payment into the bank with a deposit created when the bank makes a new loan.

Explain the connection: In both cases, what does the deposit represent for the customer? What does it represent for the bank? What asset does the bank record in each case?

Investigate · Payments between banks
Imagine Alex uses a different bank. What additional transaction would the banks need to arrange? Use the Deutsche Bundesbank’s explanation of money creation to investigate the difference between changing customer balances and settling a payment between banks.

Documentary Study

Examine the Promises Behind the Balances

For a later session, watch Money as Debt Part II: Promises Unleashed, the documentary linked from Banking Fundamentals Lesson 1.

Plan the viewing: The film is listed at 1 hour, 16 minutes, 45 seconds, with the banking lessons 1–3 recommended beforehand. Schedule the full film separately from the 15-minute activity. A teacher can also preview it and select a relevant excerpt, recording the chosen start and finish times.

Before watching: Write one sentence explaining what Maya owns after depositing her cash and who owes the corresponding obligation.

During viewing: Record one claim about deposits, bank obligations, or the creation of bank money. Write the claim in your own words and note its timestamp.

After viewing: Compare that claim with the relevant curriculum lesson and one of the primary sources below. Identify a passage that supports it, qualifies it, or leaves a question unanswered.

Written reflection: “What does a bank balance promise, and how did our deposit, payment, and withdrawal activity help me understand that promise?” Use one example from the activity and one detail from your reading or viewing.

Teacher review: Look for an accurate description of who owes whom, a specific example, and a relevant source passage. Assess the learner’s reasoning and evidence, rather than agreement with every argument in the documentary.

Sources & Further Reading

Check the Explanation

Use these sources to check the meaning of a deposit and to distinguish the accounting relationship from questions about regulation, protection, or policy.

Your Learners

Who These Materials Are For

The lesson packs are designed for parents teaching at home, teachers adding enrichment activities, and facilitators working with small groups. Independent learners can also use the activities to check their understanding.

Check each pack's suggested age, difficulty, and prerequisite knowledge before beginning. The teacher notes will help you prepare the explanation and adapt the activity to your learners.

Inside Each Pack

What You Will Find in Each Topic

Each lesson-pack topic will bring together the teaching materials for one concept:

Getting Started

How to Use a Lesson Pack

1. Choose a topic and prepare.
Read the overview and teacher notes. Check the recommended background reading, gather the materials, and open any simulator or video you plan to use.

2. Begin with the opening question.
Ask learners what they think happens before explaining the concept. Keep their predictions so they can compare them with what they discover.

3. Complete the activity.
Follow the instructions and record the results. Encourage learners to explain what changed and why. Use the paper alternative when one is provided.

4. Discuss and review.
Work through the questions together, then let learners complete the short understanding check independently. Use the answer guide to identify anything that needs another explanation.

5. Continue learning.
Follow the linked lesson, documentary, or extended reading. Each suggested extension will include a question or task to give the reading or viewing a clear purpose.

Connected Learning

How This Connects to the Rest of MLMF

The teaching packs provide a practical way to work through material across the Foundation:

Money Mechanics provides the core lessons to read alongside the activities.

Interactive Simulators let learners change inputs and examine the results within a model.

Documentary & Video provides material for guided viewing and discussion.

Extended Studies offers further reading and questions to investigate.

Each pack will identify the specific resources that support its activity, so you can follow the connections directly.