Money Creation

The simulation provides an accounting framework that can be used to simulate various scenarios of money creation. The user can select certain actions and can see how the accounts change and money is created. Selected scenarios and the accounting framework are introduced to the users with videos.

Scenarios include

  • a scenario that considers only one bank and does not consider currency holdings (Basic)
  • a scenario that considers a multi bank system and consequently the transfer of base money between banks (Basic with inter-bank payments)
  • a scenario that considers non-bank transfers between banks (Basic with non-bank transactions across banks)
  • a scenario that considers cash withdrawals of non-banks (Cash withdrawals)

The simulation also includes a step by step money multiplier process assuming that banks in each round increase their loans by the available excess reserves (see Multiplier tab).

Type of Simulation: Runs directly in browser

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