Money Creation: Genesis 3: Bank Deposits

13 Pages Posted: 6 Apr 2013

Date Written: April 4, 2013

Abstract

After the discovery by the goldsmith-bankers that loans could be made by the issue of the newly accepted means of payments, receipts/bank notes, there was an inevitable next step: deposit money. Bank notes are deposits, but in a different form. Bank deposits are also accounting entries, but they are easier to manage - because they are divisible to the lowest-denomination currency unit. Also, loans can be made by crediting a deposit account or allowing the account to be overdrawn. The shift to the creation of deposit accounts for clients and the transfer of amounts from one account to another is a defining moment in the history of money and money creation.

Keywords: money, money creation, central banking, banking, monetary policy, economic history

JEL Classification: A22, B15, E42, E51, E52, G21, N13

Suggested Citation

Faure, Alexander Pierre, Money Creation: Genesis 3: Bank Deposits (April 4, 2013). Available at SSRN: https://ssrn.com/abstract=2245041 or http://dx.doi.org/10.2139/ssrn.2245041

Alexander Pierre Faure (Contact Author)

Rhodes University ( email )

Fine Art Department
Rhodes University, PO Box 94
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South Africa
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HOME PAGE: http://ru.ac.za

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