How Banks Create Money
Tim explains how banks and their customers interact in the "creation" of money, and provides an overview of the banking system and its limitations.
Overview
Money has three functions in a modern economy: a store of value, a unit of account and a medium of exchange. And it exists in different forms. By making loans, banks create money, but several factors limit their ability to do so.
Key learning objectives:
What functions does money have?
What types of money exist?
How do banks create money by making loans?
What limits banks’ ability to create money?
Summary
Expert
Tim Skeet
Banker with more than 35 years experience in the financial markets. Tim has been an ICMA board member and an ECBC steering committee member. Tim is a Freeman of the City of London.
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