Who is Professor Richard Werner?
Richard is a Member of Linacre College, Oxford, and is a university professor in banking and finance. He is also a founding chair of Local First, a community interest company establishing not-for-profit community banks in the UK (including the Hampshire Community Bank).
What are the three theories of money mentioned by Dr Richard Werner describe them?
Werner. He distinguishes three models or theories of banking: the loanable funds model, the theory of reserve circulation, and credit creation out of nothing.
What is quantity theory of credit?
The Quantity Theory of Credit proposes that increasing the allocation of credit money for non-GDP transactions (transactions that do not increase GDP (gross domestic product)) will have no impact on economic growth, and will instead promote asset price inflation (Lyonnet & Werner, 2012, p. 95; Werner R. A., 2005).
How does Geoffrey Ingham define money?
Ingham says we have learned at least two things from the debate about money: firstly, that money is a resource available to serve the community; and, secondly, that control of money is unavoidably political.
Can individual banks create money?
According to the fractional reserve theory of banking, individual banks are mere financial intermediaries that cannot create money, but collectively they end up creating money through systemic interaction.
What are the 3 banking theories?
These are credit creation theory, fractional reserve theory and debt intermediation theory.
What causes liquidity trap?
A liquidity trap is caused when people hoard cash because they expect an adverse event such as deflation, insufficient aggregate demand, or war. Among the characteristics of a liquidity trap are interest rates that are close to zero and changes in the money supply that fail to translate into changes in the price level.
What is meant by high powered money?
High powered money is the liability of the monetary authority of the country. This is also called the monetary base and is created by the RBI. High powered money includes currency (notes and coins), deposits with the government and reserves of commercial banks with RBI. So, to sum up, high powered money is. H = C + R.
What is the social theory of money?
In her book The Social Meaning of Money (1994), Zelizer proposes that money does not in fact transform values, and that fungibility is not dependent on market utility. Rather, social values transform money, and fungibility depends on social meaning.
How do banks create money Werner?
We find that the most accurate description is that banks create new money whenever they extend credit, buy existing assets or make payments on their own account, which mostly involves expanding their assets, and that their ability to do this is only very weakly linked to the amount of reserves they hold at the central …
Can banks individually create money out of nothing Werner?
Who proposed credit creation theory?
Richard Werner proposes that Say’s Law can be applied to credit creation, because increasing the supply of credit creates its own demand. Lending secured on dwellings accounts for 49.6% of total United Kingdom bank lending in 2017.
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