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Banks as accelerators of the circulation of money

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  • Laurent Le Maux

    (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis)

Abstract

The money multiplier approach asserts that banks are unique in that they implement a creation of money, while the finance approach regards banking institutions as financial intermediaries among others. In retrospect, Cantillon's Essai stands between these two extreme approaches. It both challenges the money multiplier approach and grants to banks a significant monetary role. The aim of the paper is to clarify Cantillon's theoretical propositions on bank issuing of debts convertible on demand into money at face value and to explore further the proposition according to which banks contribute to accelerating the circulation of money.

Suggested Citation

  • Laurent Le Maux, 2015. "Banks as accelerators of the circulation of money," Post-Print hal-01397044, HAL.
    • Handle: RePEc:hal:journl:hal-01397044
    DOI: 10.1057/eej.2014.75
    Note: View the original document on HAL open archive server: https://hal.science/hal-01397044
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    References listed on IDEAS

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    1. Neil T. Skaggs, 1991. "John Fullarton's Law of Reflux and Central Bank Policy," History of Political Economy, Duke University Press, vol. 23(3), pages 457-480, Fall.
    2. Laurent Le Maux, 2014. "Cantillon And Hume On Money And Banking: The Foundations Of Two Theoretical Traditions," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 956-970, December.
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    6. Laurent Le Maux, 2012. "The Banking School and the Law of Reflux in General," History of Political Economy, Duke University Press, vol. 44(4), pages 595-618, Winter.
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