We have now critically examined the common public and textbook understanding of money and banking and showed how banking in the UK has developed over the past three centuries. We have seen that today the bulk of the UKâ€™s money supply is created not by the state, the Bank of England, the Treasury, or the Royal Mint, but by a small collection of private, profit-oriented companies that are commonly known as banks. These are the fundamentals. However, it is important also to have a grasp of the workings of the presentday money and banking system in the UK. In particular, we need to understand that there are some constraints on the quantity of credit that banks can create even though they effectively have a licence to create new money. The next two chapters provide a detailed overview of the way that commercial banking works today in the UK and how it interacts with the central bank, the payment system and the money markets. To start, we need to address the concept of liquidity.
Andrew Jackson - Where Does Money Come From - Positive Money pdf from epub