Endogenous Money Supply Theories and Their Main Implications

Peter Aradvanyi () and Zoltan Szalai ()
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Peter Aradvanyi: Magyar Nemzeti Bank
Zoltan Szalai: Magyar Nemzeti Bank

Financial and Economic Review, 2025, vol. 24, issue 1, 74-100

Abstract: Contrary to earlier exogenous approaches, it is now accepted, particularly among monetary experts, that the creation and the putting into circulation of money in modern financial systems is an endogenous process. However, there is still a significant delay in drawing a number of conclusions. This article presents what we consider to be the most important implications for the monetary policy toolbox, the implementation of monetary policy and international capital flows. An endogenous money creation approach can help to provide a more solid foundation for analyses and avoid possible economic policy mistakes.

Keywords: interbank market; monetary policy toolkit; endogenous monetary theory; current account; net and gross international capital flows; sterilisation (search for similar items in EconPapers)
JEL-codes: E41 E51 E52 E58 F32 F36 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:mnb:finrev:v:24:y:2025:i:1:p:74-100

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