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You can't use central bank reserves to buy government bonds! They're not legal tender.
by FiberBundle 4y ago
You can't use central bank reserves to buy government bonds! They're not legal tender.
- skybrian 4y agoYou can't own central bank reserves at all, but all banks accept them for money transfers from other banks. That's how money transfers between banks work and being able to do that is why you have a bank account at all. Paying for things this way is as money as it gets.
- mike_hearn 4y agoYes, central banks buy government bonds from commercial banks but that is irrelevant. The commercial banks effectively act as pass-throughs. They buy government bonds knowing that they'll immediately offload them to the central bank. The way money printing works in the modern economy is much more complicated than it used to be, but it boils down to the same thing with the same problems.