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?

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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

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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?

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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’?

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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

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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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