tag:blogger.com,1999:blog-2277215496195926573.post6730660923158245207..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: When a bank makes a loan, does it create money?Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2277215496195926573.post-76321507806419742802014-03-17T02:56:41.567-07:002014-03-17T02:56:41.567-07:00Reserve requirements are enforced after the loan i...Reserve requirements are enforced after the loan is made, not before.<br />During the accounting period at time T, you lend regardless of your current reserves. Then, during the accounting period at time T+1 you must get enough reserves to match the lending you made at time T.<br />You get those reserves either from other banks or from your CB (which cannot refuse to provide them).Giacomohttps://www.blogger.com/profile/17354055357772897620noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-15515252966332227952014-03-13T21:03:17.918-07:002014-03-13T21:03:17.918-07:00No, they need reserves. But if a central bank want...No, they need reserves. But if a central bank wants to maintain the overnight/fed funds/bank rate at its target rate (as is the policy objective of all sovereign central banks), the central bank makes any necessary accommodation to the quantity of reserves in the system so that target rate is met. See empirical studies by Scott Fullwiler and others.Kylehttps://www.blogger.com/profile/07016917190049413130noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-73690956853546085042014-03-13T11:36:18.150-07:002014-03-13T11:36:18.150-07:00Do you know of any bank that can make loans withou...Do you know of any bank that can make loans without having any money in reserves? If you find one, then I will accept that banks can create money by making loans. If they need reserves and the loans are backed by reserves, then reserves create loans. These economist sound like cranks. Rickhttps://www.blogger.com/profile/04662170243386595293noreply@blogger.com