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DEFINITION
MONETARY SYSTEM
- Any formal structure adapted by a government that issues a currency which is accepted as the medium of exchange by its citizens and by other governments. Most monetary systems are managed by a central bank which is given the authority to print money and control its supply in the economy.
MONEY CREATION
- the process by which the money supply of a country, or of an economic or monetary region, is increased. In most modern economies, most of the money supply is in the form of bank deposits. Central banks monitor the amount of money in the economy by measuring the so-called monetary aggregates.
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FUNCTION OF BANKS
MONEYTARY SYSTEM AND MONEY CREATION
WHAT I LEARN
- Function of banks, money and Federal Reserve System (the Fed)
- How banking system creates money and how the Fed controls the quantity of money.