Money creation
From The Art and Popular Culture Encyclopedia
|
Related e |
|
Featured: |
Money creation (also known as credit creation) is the process by which the money supply of a country or a monetary region (such as the Eurozone) is increased. A central bank may introduce new money into the economy (termed "expansionary monetary policy", or by detractors "printing money") by purchasing financial assets or lending money to financial institutions. However, in most countries today, most of the money supply is in the form of bank deposits, which is created by the fractional reserve banking system. Bank lending multiplies the amount of broad money beyond the amount of base money originally created by the central bank. Reserve requirements, capital adequacy ratios, and other policies of the central bank limit this process.
See also
- A Program for Monetary Reform
- American Monetary Institute
- Seigniorage - physical money creation
