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Money and money creation in Focus

Money Creation in the Modern Economy

Katalin Botos
Professor Emerita, University Professor, University of Szeged, Pázmány Péter Catholic University

Published in: Public Finance Quarterly 2016/4 (p. 442-457.)


SUMMARY: An age-old debate has recently resurfaced in the columns of a daily newspaper Money creation in practice. Misconceptions and reality. Is the issue still topical; indeed, is it one of journalism? Especially since the crisis, the public is still highly preoccupied with how banks have come to have so much money. Experts in professional circles believe they know how money is created. The textbooks used in economics education to this date teach the theory of traditional money multiplication. But nobody seems to be interested in what the essence of money is – which in fact is not independent of its creation. As the saying goes, it is not important what money is, only the effect it has.

KEYWORDS: money creation, financial crisis, securities market

JEL CODES:
E4, E44, E5, E52, E58, E6, F3


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