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Some Clarity on Banks as Financial Intermediaries and Money ‘Creators’

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  • Nicholas Spearman

Abstract

Although the phrase ‘banks create money’ forms part of popular discourse, it has precipitated a factually incorrect understanding of a bank’s role in the money creation process. Bank money creation is the result of an underlying value-for-value exchange transaction; the bank facilitates the transaction, takes over responsibility for obligations created and records the money created—the […]

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  • Nicholas Spearman, 2015. "Some Clarity on Banks as Financial Intermediaries and Money ‘Creators’," Working Papers 523, Economic Research Southern Africa.
    • Handle: RePEc:rza:wpaper:523
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    Keywords

    central bank; Financial Markets;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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