Money Creation by Banks: Articles
11.26.2020 The Economist, Why It Is Misleading to Blame Financial Imbalances on a Saving Glut
New research calls for a careful distinction to be made between saving and financing flows. 1.26.2019 Rebuilding Macroeconomics, What Is Money Today? Legal and Economic Perspectives Money today is different to money even a decade ago. The use of cash is declining and many non-bank companies offer digital payment systems and ‘cryptocurriencies’ that are supposed to work as the new money. Facebook is the latest to join the bandwagon with its LIBRA proposal and access to a staggering 2.4 billion active social media accounts. 3.2016 IMF Finance & Development, The Truth about Banks Banks create new money when they lend, which can trigger and amplify financial cycles. 2015 Financial Times, The Reality Gap in the Role of Banks BoE paper finds theoretical view of lenders is out of date. Banks do not simply lend out money deposited by savers, the so-called loanable funds model that most economic textbooks propound. Instead they create deposits when they make loans, effectively expanding the money supply. |