Sat. Jul 13th, 2024

The Bank of England explains how commercial banks create money out of thin air

The Bank of England explains how commercial banks create money out of thin air

This is Ryland Thomas from the Bank of England in a recently released video where he explains how money is created by commercial banks. The background with all the bars of gold give additional impact to what he says!

"Banks create additional broad money whenever they make a loan. Now while this is nothing new, it is sometimes overlooked as the main way in which money is created. And it runs contrary to the view sometimes put forward that banks can only lend out deposits that they already have. In fact loans create deposits - not the other way round. "

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