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Banks Quote by Michael Kumhof

“The key function of banks is money creation, not intermediation.” quote by Michael Kumhof
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“The key function of banks is money creation, not intermediation.”

Michael Kumhof

About This Quote

Source Book: The Financial System by Michael Kumhof, 2015

Banks primarily generate new money through lending, rather than merely channeling existing funds.

In simple terms: Banks create money, not just move it.

Key Takeaway

Focus on the money‑creation role of banks.

Themes

economics banking monetary policy

Mood

analytical critical

Type

economic financial

When to use this quote

  • central banking
  • policy analysis
  • financial education

Key Concepts

Money creation intermediation financial stability

Questions to Reflect On

  • How does money creation affect inflation?
  • What risks arise from banks’ dual roles?
A Different Perspective

Overlooks the intermediation function that still adds value.

3.4 out of 5 (8 ratings)

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