Learn About Money – Part 4: How Much Money Can Banks Create?
How much money can banks create – (Part 4 of 6)
What does actually limit the ability of banks to increase the money supply?
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In this video you’ll see that the type of reserve ratio that’s discussed in the textbooks has never even existed in the UK.
We’ll see that the liquidity ratios that did exist have been reduced and eventually abolished, and that even when they did exist, they only limited the speed that the money supply could increase, but put no limit on the total size that it could grow to.