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dc.contributor.author
Faure, Salomon
dc.contributor.author
Gersbach, Hans
dc.date.accessioned
2021-09-30T16:08:06Z
dc.date.available
2021-07-29T06:24:03Z
dc.date.available
2021-07-29T06:26:15Z
dc.date.available
2021-09-30T16:08:06Z
dc.date.issued
2021-09
dc.identifier.issn
1614-2446
dc.identifier.issn
1614-2454
dc.identifier.other
10.1007/s10436-021-00385-5
en_US
dc.identifier.uri
http://hdl.handle.net/20.500.11850/498313
dc.identifier.doi
10.3929/ethz-b-000498313
dc.description.abstract
We study today’s two-tier money creation and destruction system: Commercial banks create bank deposits (privately created money) through loans to firms or asset purchases from the private sector. Bank deposits are destroyed when households buy bank equity or when firms repay loans. Central banks create electronic central bank money (publicly created money or reserves) through loans to commercial banks. In a simple general equilibrium setting, we show that symmetric equilibria yield the first-best level of money creation and lending when prices are flexible, regardless of monetary policy and 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. Finally, we provide a series of extensions and generalizations of the results.
en_US
dc.format
application/pdf
en_US
dc.language.iso
en
en_US
dc.publisher
Springer
en_US
dc.rights.uri
http://creativecommons.org/licenses/by/4.0/
dc.subject
Money creation
en_US
dc.subject
Bank deposits
en_US
dc.subject
Capital regulation
en_US
dc.subject
Zero lower bound
en_US
dc.subject
Monetary policy
en_US
dc.subject
Price rigidities
en_US
dc.title
On the money creation approach to banking
en_US
dc.type
Journal Article
dc.rights.license
Creative Commons Attribution 4.0 International
dc.date.published
2021-07-27
ethz.journal.title
Annals of Finance
ethz.journal.volume
17
en_US
ethz.journal.issue
3
en_US
ethz.journal.abbreviated
Ann Finance
ethz.pages.start
265
en_US
ethz.pages.end
318
en_US
ethz.version.deposit
publishedVersion
en_US
ethz.code.jel
JEL - JEL::D - Microeconomics::D5 - General Equilibrium and Disequilibrium::D50 - General
en_US
ethz.code.jel
JEL - JEL::E - Macroeconomics and Monetary Economics::E4 - Money and Interest Rates
en_US
ethz.code.jel
JEL - JEL::E - Macroeconomics and Monetary Economics::E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
en_US
ethz.code.jel
JEL - JEL::G - Financial Economics::G2 - Financial Institutions and Services::G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
en_US
ethz.identifier.wos
ethz.identifier.scopus
ethz.publication.place
Berlin
en_US
ethz.publication.status
published
en_US
ethz.leitzahl
ETH Zürich::00002 - ETH Zürich::00012 - Lehre und Forschung::00007 - Departemente::02120 - Dep. Management, Technologie und Ökon. / Dep. of Management, Technology, and Ec.::03729 - Gersbach, Hans / Gersbach, Hans
en_US
ethz.date.deposited
2021-07-29T06:24:07Z
ethz.source
FORM
ethz.eth
yes
en_US
ethz.availability
Open access
en_US
ethz.rosetta.installDate
2021-09-30T16:08:13Z
ethz.rosetta.lastUpdated
2021-09-30T16:08:13Z
ethz.rosetta.exportRequired
true
ethz.rosetta.versionExported
true
ethz.COinS
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