EconomyNational 17h 18m left
Should high street banks lose the power to create new money when they lend?
In the UK, commercial banks create the majority of money in circulation—around 97%—when they issue loans, simultaneously creating a matching deposit. This process, confirmed by the Bank of England, drives economic activity but is criticised for contributing to debt, asset bubbles and inequality. Campaigns like Positive Money advocate shifting money creation exclusively to the central bank.
2 Opinions
The question makes banking sound sinister, but this is just the process of offering loans, like mortgages, rather than keeping money moldering in vaults. Banks specialise in identifying good investments that can repay debt, far better than bureaucracies like the Bank of England. However, the BoE understands and manages this process so the UK has the right amount of money to avoid high inflation, but companies and individuals can borrow money for profitable projects or houses.
If anyone else tried to do it they be arrested for counterfeiting