2 ms·

There is a academic paper here explaining how it works. https://www.sciencedirect.com/science/article/pii/S1057521914001070 https://www.sciencedirect.com/scien

There is a academic paper here explaining how it works. https://www.sciencedirect.com/science/article/pii/S1057521914001070 https://www.sciencedirect.com/science/article/pii/S105752191... Essentially the bank can make the loan with a zero balance sheet. If you work at the back end of a retail bank operation then you'll know that the loan department and the treasury department do not talk to each other about quantities. They talk to each other about price. Other than that the two operations operate in parallel. 'Funding' is just swapping the liabilities around in the market to try and reduce the amount the bank pays out in interest.

kgwgk 8y ago
“I find it difficult to understand how this flow of funds analysis validates an assertion of general principle. What is described is a special case where a highly leveraged bank could find itself temporarily insolvent, with a very limited window of exposure before the bank would be found guilty of criminal fraud.” https://www.cooperative-individualism.org/dodson-edward_review-of-richard-werner-can-banks-individually-create-money-out-of-nothing-2015.htm https://www.cooperative-individualism.org/dodson-edward_revi...