How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Report Q1 2014    —

“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

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