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16 January 2013

How banks create and destroy money – A guide to the Eurozone monetary system

This publication by Sensible Money demonstrates the accountancy procedures by which banks create and destroy the vast majority of the Eurozone’s money.
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This publication by Sensible Money demonstrates the accountancy procedures by which banks create and destroy the vast majority of the Eurozone’s money. It also explains how money is transferred domestically and throughout the Eurozone as well as procedures like quantitative easing and how the ECB attempts to implement its monetary policy.

It has been adapted to the euro-system from UK-specific guides on the UK monetary and banking system.

Read here 

 

Here is also a more detailed and quite technical version of this document. It assumes some prior knowledge of accountancy and economics. It describes how the system actually runs and then analysis how incomplete the money multiplier model of banking is at describing the money creation process.

 

 

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