The Bundesbank article causes it to be clear that bank financing isn’t reserve-constrained.

The Bundesbank article causes it to be clear that bank financing isn’t reserve-constrained.

Geldschopfung erfolgt zunachst unabhangig von bestehenden Zentralbank-guthaben der Banken … Geldschopfung zeigt im Besonderen, dass die Kreditvergabe ohne that is grundsatzlich Zu usse von Kundeneinlagen statt finden kann.

Or, “Money is first developed in addition to the banking institutions’ current bank balances …” during the main bank and that bank “lending can invariably occur without previous inflow of client deposits. ”

The Bundesbank states that this understanding:

Dies widerlegt einen weitverbreiteten Irrtum, wonach die Bank im Augenblick der Kreditvergabe nur als Intermediar auftritt, additionally Kredite lediglich mit Mitteln vergeben kann, die sie zuvor als Einlage von anderen Kunden erhalten hat.

Or, this understanding “rejects the widespread error” that sees the financial institution as a intermediary allocating loans with funds “previously received as deposits off their customers”.

So that the indisputable fact that accumulating bank that is central (reserves) will allow commercial banking institutions to grow loans is dismissed as lies as is the theory that the financial institution hinges on build up which will make loans – two central propositions of traditional monetary theory that MMT has exposed into the past.

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