You own a bunch of Kroks. You might give a few Kroks in exchange for something, such as food. Alternatively, you might work in exchange for a few Kroks.
You might move, and you might not want to carry all those kroks with you. Instead, you leave your kroks with a trusted friend in your old town. A couple years later, you are reminded of the kroks left with your friend, when another friend travels to your old town. You give your second friend a letter of introduction addressed to your first friend, and also request that your first friend give your second friend several from your stash of kroks. You thereby satisfy an obligation, and make use of the kroks otherwise left forgotten.
First friend sets himself up in business as a repository for kroks. He formalizes what you did with him informally. He accepts deposits of kroks, and creates checks for his depositors. A depositor can write a check, ordering that First Friend give a certain number of kroks to the order of the recipient, out of the kroks the depositor has on account.
You write a check, payable to A's order. A could go to First Friend's and get the kroks. But that might be inconvenient for him. Instead, A endorses the check over to B, meaning that B has the right to get the kroks. B might endorse the check over to C, giving C the right. Eventually somebody actually gets the kroks, right?
C might endorse the check to First Friend, requesting that First Friend take the kroks and deposit them into C's account at First Friend. Now, First Friend has the right to demand the kroks from himself, and the obligation to pay the kroks to himself. In other words, he does nothing with the kroks, but only deducts the number from your register and increase's C's register by that number. The kroks in his repository remain unchanged.
The obligation to deliver kroks (ODK) has made a complete loop, involving no actual kroks. Your kroks are out of the loop.
First Friend sees an opportunity for a scam: since kroks are out of the loop, he need not keep them. Suppose he lent them out, in exchange for interest and eventual repayment of principal? Of course, there's a probability that some claimants will claim actual kroks, rather than deposit them in his repository, so he holds a certain number on reserve.
First Friend can go one better. In lending kroks to his borrower, he simply creates an account in his repository, and credits it with the appropriate number of kroks. The borrow now writes checks against his account, which may eventually find itself back with First Friend. Again, actual kroks are out of the loop. ODKs (an ODK is an Obligation to Deliver Kroks) have now become the medium of exchange -- money. ODKs are denominated in Kroks, but the total number may be many more than the number of actual Kroks.
Of course, in general, there is no obligation to accept ODKs, except for First Friend who has to deliver Kroks on demand if the drawer's account has sufficient Kroks.
Suppose C deposits your check (or ODK) into the repository run by First Enemy instead of First Friend? First Enemy could have a courier travel to First Friend, present the ODK, claim the Kroks, and return with the Kroks. First Friend might instead present another ODK drawn against First Enemy, perhaps enough to offset 2/3 of the Kroks and deliver the remaining 1/3 as actual Kroks. The courier would return with 1/3 the Kroks, the ODK against First Enemy as satisfied by offseting the remaining Kroks, and a letter to this effect.
In fact, if First Friend and First Enemy are sufficiently trusting of each other, the offsets could be done by wire, trusting the claimed ODKs to be genuine. Alternatively, First Friend, First Enemy, and various other repositories may create a Central Bank to serve as a central clearing house for Kroks and ODKs.
Kroks are now pretty much written out of the loop. ODKs form the medium of exchange.
One last thing: what the heck is a Krok, and why the heck would you involve yourself with such a thing?