Money creation, or money issuance, is the process by which the money supply of a country, or of an economic or monetary region,[note 1] is inc

Money creation - Wikipedia

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2021-05-30 23:30:04

Money creation, or money issuance, is the process by which the money supply of a country, or of an economic or monetary region,[note 1] is increased. In most modern economies, most of the money supply is in the form of bank deposits.[1] Central banks monitor the amount of money in the economy by measuring the so-called monetary aggregates.[note 2]

The term "money supply" commonly denotes the total, safe, financial assets that households and businesses can use to make payments or to hold as short-term investment.[2] The money supply is measured using the so-called "monetary aggregates", defined in accordance to their respective level of liquidity. In the United States, for example:

The money supply is understood to increase through activities by government authorities,[note 3] by the central bank of the nation,[note 4] and by commercial banks.[3]

The authority through which monetary policy is conducted is the central bank of the nation. The mandate of a central bank typically includes either one of the three following objectives or a combination of them, in varying order of preference, according to the country or the region: Price stability, i.e. inflation-targeting; the facilitation of maximum employment in the economy; the assurance of moderate, long term, interest rates.[4]

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