FAQs relating to banking and finance
In that infographic from the BOE it shows that when the buyer pays the seller for the house, the reserves drop in the originating bank to below the deposit level. Is that correct, what am I missing.
Yes, that's right. Remember the buyer pays the deposit with his loan, not his other deposits. This is the kind of thing that limits money creation.
In that infographic from the BOE it shows that when the buyer pays the seller for the house, the reserves drop in the originating bank to below the deposit level. Is that correct, what am I missing.
Yes, that's right. Remember the buyer pays the deposit with his loan, not his other deposits. This is the kind of thing that limits money creation.