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dc.contributor.author
Gersbach, Hans
dc.contributor.author
Zelzner, Sebastian
dc.date.accessioned
2023-06-15T11:28:19Z
dc.date.available
2022-12-15T16:06:53Z
dc.date.available
2023-01-09T14:39:24Z
dc.date.available
2023-06-15T11:28:19Z
dc.date.issued
2022-12-15
dc.identifier.issn
0265-8003
dc.identifier.uri
http://hdl.handle.net/20.500.11850/587528
dc.description.abstract
We provide a rationale for bank money creation in our monetary system by examining its merits over a system with banks as intermediaries of loanable funds. The latter system could result when CBDCs are introduced. In the loanable funds system, households limit banks’ leverage when providing deposits such that banks have enough “skin in the game” and monitor loans. When there is unobservable heterogeneity among banks with regard to their monitoring efficiency, aggregate bank lending is inefficiently low. A monetary system with bank money creation alleviates this problem, as banks can initiate lending by creating bank deposits without relying on household funding. With a suitable regulatory leverage constraint, the gains from higher bank lending outweigh losses from banks which are less diligent in monitoring. Bank-risk assessments, combined with appropriate risk-sensitive capital requirements, can reduce or even eliminate such losses.
en_US
dc.language.iso
en
en_US
dc.publisher
Centre for Economic Policy Research
en_US
dc.subject
Monetary system
en_US
dc.subject
Banking
en_US
dc.subject
Money creation
en_US
dc.subject
Loanable funds
en_US
dc.subject
Capital requirements
en_US
dc.subject
Leverage constraint
en_US
dc.subject
Asymmetric information
en_US
dc.subject
Moral hazard
en_US
dc.subject
CBDC
en_US
dc.title
Why Bank Money Creation?
en_US
dc.type
Working Paper
ethz.journal.title
CEPR Discussion Papers
ethz.pages.start
DP17753
en_US
ethz.size
54 p.
en_US
ethz.code.jel
JEL - JEL::E - Macroeconomics and Monetary Economics::E4 - Money and Interest Rates::E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
en_US
ethz.code.jel
JEL - JEL::E - Macroeconomics and Monetary Economics::E4 - Money and Interest Rates::E44 - Financial Markets and the Macroeconomy
en_US
ethz.code.jel
JEL - JEL::E - Macroeconomics and Monetary Economics::E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit::E51 - Money Supply; Credit; Money Multipliers
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.code.jel
JEL - JEL::G - Financial Economics::G2 - Financial Institutions and Services::G28 - Government Policy and Regulation
en_US
ethz.publication.place
London
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.leitzahl.certified
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.tag
KOF-key-banken
en_US
ethz.identifier.url
https://cepr.org/publications/dp17753
ethz.date.deposited
2022-12-15T16:06:53Z
ethz.source
FORM
ethz.eth
yes
en_US
ethz.availability
Metadata only
en_US
ethz.rosetta.installDate
2023-01-09T14:39:24Z
ethz.rosetta.lastUpdated
2024-02-03T00:08:26Z
ethz.rosetta.versionExported
true
ethz.COinS
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