What is Money?

We all use money, we all rely on money. But do we know how money works? Where does money come from? How is money created?

MKMore than 97% of all the money that exists is created by banks when they make loans. When people first hear this, they often find it hard to believe. But we don’t want you to take our word for it, read these quotes to hear what central bankers, finance journalists, and commentators have to say on the subject.

When banks extend loans to their customers, they create money by crediting their customers’ accounts.

Sir Mervyn King, Speech to the South Wales Chamber of Commerce at The Millenium Centre, Cardiff on 23rd October 2012


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Positive Money is a not-for-profit research and campaign group. They work to raise awareness of the connections between our current monetary and banking system and the serious social, economic and ecological problems that face the UK and the world today. In particular they focus on the role of banks in creating the nation’s money supply through the accounting process they use when they make loans – an aspect of banking which is poorly understood. Positive Money believe these fundamental flaws are at the root of – or a major contributor to – problems of poverty, excessive debt, growing inequality and environmental degradation. For more information, please visit: http://www.positivemoney.org/

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