There’s a lot of confu­sion about how banks work, most univer­sity econo­mics courses still teach a model of banking that doesn’t apply to the real world. While banking may seem like a compli­cated subject, anyone can learn the basics.

Do you really want to under­stand how banks create money, and what limits their ability to do so? Then our 6-part video course ‘Banking 101′ is for you!

via Banking 101 (Video Course) » Positive Money.


Part 1: Misconceptions Around Banking

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Before we discover how banks really work, and how money is created, first to clear up any confu­sion, we need to see what’s wrong about the way that most people think banks work.


Part 2: What’s Wrong with the Money Multiplier model?

2 B101

Most of these students and gradu­ates get taught about somet­hing called the ‘money multi­plier’. In this video we’ll show that it’s an inac­cu­rate and outdated way of descri­bing how the banking system works.


Part 3: How Money is Really Created by Banks

3 B101

In this new video you can learn how commercial banks can create money through the acco­un­ting process they use when they make loans, how banks make payments between each other using speci­ally created central bank money, if the Bank of England really can control how much money is in the economy …and more.


Part 4: How much money can banks create?

4 B101

What actu­ally limits how much money the banks can create? Reserve ratios, Liquidity ratios, Capital Adequacy Ratios and/or the Basel accords? Explained in an easy to under­stand way.


Part 5: Do banks create ‘money’ or just ‘credit’?

5 B101

You might hear some people say that “Banks don’t create money – they just create credit”. This response often comes from civil servants and people trying to deny that banks now create the nation’s entire money supply. So let us show you why the numbers that banks create are money, and not just ‘credit’.


Part 6: How money gets destroyed

6 B101

Remember how new money is created when a bank makes a loan? Well, when someone repays the loan, the oppo­site process happens, and money is actu­ally destroyed. It effecti­vely disap­pears from the economy enti­rely. This video explains how.



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