> Central banks like the Bank of England create money as well, but monetarists are entirely wrong to insist that their proper function is to control the money s

> Central banks like the Bank of England create money as well, but monetarists are entirely wrong to insist that their proper function is to control the money supply. In fact, central banks do not in any sense control the money supply; their main function is to set the interest rate—to determine how much private banks can charge for the money they create. Almost all public debate on these subjects is therefore based on false premises. This seems to be a weird oversight on the part of the author. Even if we accept the heterodox view of money creation as espoused by this article (which I do, for what it's worth), the central bank still plays a very important role even in the private creation of money. Setting the "risk-free" interest rate for the economy determines how much money banks are going to be willing to lend, which thereby determines how much money they will create. Just because the central bank is not printing the money themselves does not mean that their policy levers are not having profound effects on the money supply.