3 ms·

Ok, and how do banks get the money in the first place?

• deleted 5y ago
  [deleted]
• dragonwriter 5y ago
  > Ok, and how do Banks get the money in the first place? They create it from the air. They note the debt on one side and the balance on the other when they issue a loan.
  • shoto_io 5y ago
    And how is the central bank involved in this?
    • nradov 5y ago
      The central bank provides liquidity to member banks in case of a bank run, and imposes limits on money creation (lending) based on capital reserves and other factors.
    • dragonwriter 5y ago
      > And how is the central bank involved in this? Via reserve requirements and coordinating interbank lending: https://www.investopedia.com/terms/i/interbankrate.asp https://www.investopedia.com/terms/i/interbankrate.asp