Creation of central bank money in the European Union

Mikołaj Szadkowski
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Mikołaj Szadkowski: Narodowy Bank Polski, Warsaw School of Economics

Bank i Kredyt, 2025, vol. 56, issue 3, 309-338

Abstract: The aim of the article is to determine what part of the money created in the economy – from the point of view of the sources of its creation – is the responsibility of the central bank, and what part – of other monetary financial institutions. In other words, the aim of the study is to determine the size of the central bank’s share in money creation and to indicate the factors that determine it. Therefore, a method of calculating the total amount of money creation by the central bank and its allocation to individual sources of creation has been proposed. The calculations were made for the central banks of Bulgaria, the Czech Republic, Poland and the Eurosystem, for the period from 2002 to March 2024. The results showed that central banks create money in the economy directly or indirectly if they perform functions other than providing liquidity to credit institutions for their mutual payment settlements, and as a result of the usage of unconventional monetary policy instruments. The size and structure of the sources of money creation depended on the conditions in which the analysed central banks operated.

Keywords: money creation; sources of money creation; central bank; credit institutions; monetary aggregates (search for similar items in EconPapers)
JEL-codes: E40 E51 E58 G21 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpbik:v:56:y:2025:i:3:p:309-338

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