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No,there is a difference: If NVDA gives a loan, its a swap on the active/left part of their balance sheet - thus, this does not have an effect on overall(!) mo
by KellyCriterion 13d ago
No,there is a difference:
If NVDA gives a loan, its a swap on the active/left part of their balance sheet - thus, this does not have an effect on overall(!) money suppley. The balance stays the same, also the total amount of money in the whole system at that current point in time.
If a bank gives a loan, then it is extending/enlengthing its balance sheet. (the money created,though,needs to be available on the central bank account to float to other banks when paying for something,therefore we have liquity rules in reg reporting in a bank etc.,meaning someone else needs to have increase thecentral banking liquidity at another part in the system, see things like: https://en.wikipedia.org/wiki/Maturity_transformation https://en.wikipedia.org/wiki/Maturity_transformation )