Every central bank does. If you think the ECB is bad, take a look at Japan. Unfortunately the entire "global financial system" is based on this. But don't call it a ponzi scheme or Serious Economists will tell you why it is totally sustainable.

"Literally" was probably an exaggeration, but they are in a way.

If you deposit $100 with bank A, and they give a loan for $80 to person B, you have $100 to spend and person B has $80, so $180 can float through the economy.

The $80 debt should cancel out person B's surplus, but it kind of doesn't if interest rates are low enough because they'll never actually pay it back.

That's my potentially poor understanding of it.