START HERE: How do banks create money? >>>
The links below will tell you everything you need to know about how banks create money and how the modern monetary system works.
Overview
How banks create money
The money that banks create is the electronic money that flashes up on the screen when you check your balance at an ATM. Find out how it’s created every time a bank makes a loan.
The Proof
The way that money is taught in universities is often very inaccurate. These papers and sources from central bankers and other experts show how the system really works.
How We Got Here
The laws that make it illegal for you to print your own £5 or £10 notes have been in place since 1844. But these laws have never been updated to account for the fact that 97% of money is now digital.
How Much Money Have Banks Created?
From the time when the Bank of England was formed in 1694, it took over 300 years for banks to create the first trillion pounds. It took them only 8 years to create the second trillion.
The Technical Details
Video Course: Banking 101
This free animated video course (total 57 minutes) explains how the modern banking system creates money, and what limits how much money banks can create.
Advanced: All the technical details
This section covers all the nitty-gritty details of money creation by banks. We cover the three types of money, how balance sheets work, how central and commercial banks create – and destroy – money and what is wrong about the textbooks taught in universities. Read more…
Books
Book: Where Does Money Come From?
“Refreshing and clear. The way monetary economics and banking is taught in many – maybe most – universities is very misleading and this book helps people explain how the mechanics of the system work.”
– Professor David Miles, Monetary Policy Committee, Bank of England
Book: Modernising Money
Why our monetary system is broken, and how to fix it.
“Money is a social invention, indeed among the most important of all social inventions. At present the right to create money has been handed over to the private businesses we call banks. But this is not the only way we could create money and, as recent experience suggests, it may be far from the best one. Read this book with an open mind and you will understand why.”
– Martin Wolf, Chief Economics Commentator, Financial Times
Further Resources
Papers and videos from:
- The Bank of England
- The International Monetary Fund
- Lord Adair Turner, former chairman of the UK’s Financial Services Authority
- Other professors and experts in the monetary system