Last week the Bank of England has published papers explaining how “the majority of money in the modern economy is created by commercial banks making loans.” The papers give the clearest explanation ever given by any central bank of the fundamentals of money creation and are mostly in line with the analysis of Positive Money. However, the Bank of England still seems to believe it can “ultimately” control the money creation.
Can central banks really control money creation?
Tony Greenham, Head of Finance and Business at New Economics Foundation discusses this question at Monetary Policy Seminar, 13th Nov 2013.
Watch now (28 min):
“Monetary policy is ineffective in controlling quantity of money.”