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Thursday March/9,/2017 - 6:55PM (UTC) Bank and money - There are still those who think that money is guaranteed by real value with goods and / or securities and some say that all banks can create money out of thin air indefinitely. Both are wrong. Apart from the central bank, which can also create money to buy bonds, all other commercial banks create money out of thin air only through the loans. When a bank makes a loan, simultaneously it emits the given currency. It creates out of nothing. And asks on the loan interests. For the bank, the loan becomes a credit and currency issued (which can also be deposited at the same bank: this is why it is said that loans create deposits, and not vice versa) becomes a debt. But the bank can not issue currency indefinitely (otherwise there would be no banking crises). When who has received the loan takes the money, or pay with that money the customer of another bank, the bank that granted the loan should have equal amount of money to an account at the central bank. The money on the central bank account can be derived from the capital of ordinary credit bank, from the savings of its customers or by the central bank loans secured by securities accepted by the central bank (the so-called eligible assets). If it does not receive eligible assets, the central bank does not lend money. The eligible securities are those have a high enough credit rating and are issued by governments and companies. If a bank suffers losses for an amount in excess of the eligible titles of which has, no longer able to make payments and it becomes insolvent. As Lehman Brothers in mid-September 2008. The problem is that almost all government bonds, although they are considered eligible, would be bad if they were not constantly refinanced. And, for rifinanziarli, the central bank issued new currency, therefore not worth anything because its equivalent securities issued by governments that without the new money could never repay their debts. It's like a cat chasing its tail. Until it falls to the ground stone dead. We are almost there. Then, it's time to EkaBank. If it is not too late. RMG

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