Money creation and destruction
- We study money creation and destruction in today’s monetary architecture and examine the impact of monetary policy and capital regulation in a general equilibrium setting. There are two types of money created and destructed: bank deposits, when banks grant loans to firms or to other banks and central bank money, when the central bank grants loans to private banks. We show that equilibria yield the first-best level of money creation and lending when prices are flexible, regardless of the monetary policy or capital regulation. When prices are rigid, we identify the circumstances in which money creation is excessive or breaks down and the ones in which an adequate combination of monetary policy and capital regulation can restore efficiency.
Author: | Salomon Faure, Hans GersbachGND |
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URN: | urn:nbn:de:hebis:30:3-420734 |
URL: | https://ssrn.com/abstract=2866473 |
Parent Title (English): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 555 |
Series (Serial Number): | CFS working paper series (555) |
Publisher: | Center for Financial Studies |
Place of publication: | Frankfurt, M. |
Document Type: | Working Paper |
Language: | English |
Date of Publication (online): | 2016/11/15 |
Year of first Publication: | 2016 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2016/11/15 |
Tag: | bank deposits; capital regulation; monetary policy; money creation; price rigidities; zero lower bound |
Issue: | First Version: September 2014, This Version: October 2016 |
Page Number: | 77 |
HeBIS-PPN: | 396765467 |
Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Sammlungen: | Universitätspublikationen |
Licence (German): | Deutsches Urheberrecht |