Commercial Banks and Credit Creation
Commercial banks do not create credit solely on the advice of the government. Credit creation by commercial banks is primarily influenced by various factors, including government regulations, monetary policy, and market conditions.

Factors influencing credit creation:
- **Government Regulations:** Commercial banks operate within a regulatory framework set by the government. These regulations govern the amount of credit that banks can create through mechanisms like reserve requirements and capital adequacy ratios.
- **Monetary Policy:** The central bank of a country formulates and implements monetary policy to control the money supply and credit creation. Commercial banks adjust their lending practices in response to changes in interest rates and other monetary policy tools.
- **Market Conditions:** Credit creation by commercial banks is also influenced by market conditions, such as demand for loans from businesses and consumers, economic growth, and investor confidence. Banks assess these factors to determine the creditworthiness of borrowers and make lending decisions accordingly.

Government influence on credit creation:
While the government plays a role in shaping the regulatory environment within which commercial banks operate, it does not directly advise banks on credit creation. The government's policies and regulations can impact the overall credit conditions in the economy, but banks retain autonomy in their lending decisions.
In conclusion, commercial banks create credit based on a combination of factors, including government regulations, monetary policy, and market conditions. While the government's policies can influence credit creation indirectly, banks have the discretion to make independent lending decisions.