A bank (as long as it is not a central bank, such as the ECB), borrows the money it will lend to you, at a very low and even negative interest rate, from the central bank (such as the ECB).
Then it puts that money into your bank account. And you pay the contractors for your renovation/new construction and the previous (land) owner (at the notary). That money that you pay from your bank account and through your loan is then money that ends up in the economy through the bank accounts of the contractors and the previous (land owner).
What remains is a) your loan from the bank on which you have to pay interest. And b) the bank’s loan from the central bank (on which the bank has to pay interest to the central bank, but it is currently very low and sometimes negative).
That interest is new money created out of thin air.
But also the borrowed money, the money that the bank borrowed from the central bank, is money that was created out of thin air.
The central bank regulates the amount of money created annually by raising or lowering the interest rate (= raising or lowering the price for borrowing money for a bank). Since the economic crisis, the central bank has also been doing what they call bazookas: these are gigantic public debt purchase programs. I believe that nowadays the central bank(s) also buy stocks and bonds (these are debts) of certain companies.
Central banks do this with money that they ‘print’ themselves. In fact, they don’t print anything at all. They create that money out of absolutely and absolutely totally and completely nothing. Literally down to the nitty-gritty. Nothing and nothing at all. So nothing. Out of nothing. Except from their own accounts. So what numbers are in their own computer systems.
But. The ECB also has the leadership, the power, the task and the right to do just that. The power and the right as well as the task and the leadership were assigned to them by our EU politicians and democratically elected leaders.
They do this on the basis of policy agreements. The current agreement is that the ECB aims to target inflation close to but below 2%. It was recently announced that this will be adjusted to 2% up or below (so no longer ‘but below’). The Fed (the US central bank) has a policy targeting ‘2% on average’. Which means that if it was below 2% for a number of years, it should aim for above 2% in the following years (to achieve the average in the longer term).
A little inflation is necessary for a well-functioning economy.
The ECB must therefore indeed ‘print’ more money. They’re going to do that too. eg. the fund to tackle the Corona crisis will be partly financed from the ECB. So by simply, ridiculous-om, completely insane but totally correct from the total, absurdly total, totally-e – nothing, money, extra, to, ‘print’. Effective. Off zero. Nothing.