Daily Bulletin

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Explainer: the real role of banks in money creation

  • Written by The Conversation
imageMoney is much more than just bank notes and coins issued by central banks.EPA/Aaron Ufumeli

The phrase “banks create money” forms part of the popular discourse, but it conveys an erroneous representation of the banks' role in the money creation process.

The role of banks is primarily that of an intermediary between buyers and sellers in,...

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