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Banking 101 (Video Course)

PART 1: MISCONCEPTIONS AROUND BANKING

Before we discover how banks really work, and how money is created, first to clear up any confusion, we need to see what’s wrong about the way that most people think banks work.

Start lesson (5 mins)

PART 2: WHAT'S WRONG WITH THE MULTIPLIER MODEL

Most students and graduates get taught about something called the ‘money multiplier’. In this video we’ll show that it’s an inaccurate and outdated way of describing how the banking system works.

Start lesson (8 mins)

PART 3: HOW MONEY IS REALLY CREATED BY BANKS

See how commercial banks can create money through the accounting process they use when they make loans, how banks make payments between each other using specially created central bank money, if the Bank of England really can control how much money is in the economy …and more.

Start lesson (20 mins)

PART 4: HOW MUCH MONEY CAN BANKS CREATE?

What actually limits how much money the banks can create? Reserve ratios, Liquidity ratios, Capital Adequacy Ratios and/or the Basel accords? Explained in an easy to understand way.

Start lesson (14 mins)

PART 5: DO BANKS CREATE 'MONEY' OR JUST 'CREDIT'?

You might hear some people say that “Banks don’t create money – they just create credit”. This response often comes from civil servants and people trying to deny that banks now create the nation’s entire money supply. So let us show you why the numbers that banks create are money, and not just ‘credit’.

Start lesson (5 mins)

PART 6: HOW MONEY GETS DESTROYED

Remember how new money is created when a bank makes a loan? Well, when someone repays the loan, the opposite process happens, and money is actually destroyed. It effectively disappears from the economy entirely. This video explains how.

Start lesson (5 mins)

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Positive Money is a company limited by guarantee registered in England and Wales. Registered number 07253015.
Registered office: 104 Davina House, 137-149 Goswell Road, London EC1V 7ET.


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