Final answer:
The statement is false; banks actually create money when they issue loans, not destroy it.
Step-by-step explanation:
The statement that 'Whenever banks make loans, money is destroyed' is false. On the contrary, the process of banks making loans is a fundamental way through which money is created in the financial system. When a bank issues a loan, it does not physically hand out money from the vault; instead, it creates a deposit in the borrower's account, which increases the total amount of money in the economy. However, banks do need to manage the risks associated with lending, such as the potential for loan defaults, which can impact their financial health and the broader economy, as seen during the 2008-2009 Great Recession.