Banks Quote by Michael Kumhof
“The key function of banks is money creation, not intermediation.”
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.
Focus on the money‑creation role of banks.
Themes
Mood
Type
When to use this quote
- central banking
- policy analysis
- financial education
Key Concepts
Questions to Reflect On
- How does money creation affect inflation?
- What risks arise from banks’ dual roles?
Overlooks the intermediation function that still adds value.