finance – How interest payment work in lending under bitcoin standard?


In Fiat Standard lending creates money. Whenever the debt is fully paid the monetary supply increases (principal + interest).

What happens under bitcoin standard? Assume all the bitcoin has been mined and BTC has become the world reserve currency.

If some lending bank lends it’s borrowers X BTC at some Y% interest rate, how can borrowers pay back the interest in BTC but not increase the money supply!

How this situation is handled in a deflationary Bitcoin Standard!?

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