The second key-Clearing

Jacques Riboud

Chapter 5 in The Mechanics of Money, 1980, pp 48-64 from Palgrave Macmillan

Abstract: Abstract The clearing mechanism is generally neglected by monetary analysts; nevertheless, it is the basis on which the power of creation of payment instruments by a national banking system rests. It is thanks to this process that claims, or acknowledgements of debt, which originally had no monetary function, come to act as means of payment. It is also thanks to the clearing mechanism that money can be increased in quantity. By looking to see whether clearing takes place one can discover whether new bank money really is created independently of the central bank over and above the supply of primary money. By analysing the mechanism of the clearing one can also solve the problem, which has been at the origin of so much controversy, of the powers of self-multiplication of Eurodollars.

Keywords: Central Bank; Banking System; Total Movement; Clearing Mechanism; Clearing System (search for similar items in EconPapers)
Date: 1980
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-05112-0_6

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DOI: 10.1007/978-1-349-05112-0_6

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