3 ms·
How do retail banks issue dollars?
by devoutsalsa 3y ago
How do retail banks issue dollars?
- WesternWind 3y agoloans basically, I think?A deposits $100 you loan $97 of it to B who deposits that in their account. But A still has their $100.
- deleted 3y ago[deleted]
- arcticbull 3y agoYes, also dollar creation outside of the jurisdiction of the Fed, like the Eurodollar market. These are US dollar denominated deposits in foreign countries at banks that don't have Fed accounts and can't even settle via Fedwire (instead relying on CHIPS). The repo market is another example - and derivatives markets. The main job of the Fed is be a clearinghouse. They don't really even know how much money is out there, let alone have omnipotent control over the supply. Monetary policy is only possible because of their role as a clearinghouse, but I digress.