The (other) deleveraging: What economists need to know about the modern money creation process by Manmohan Singh and Peter Stella published by VOXEU. “The world of credit creation has shifted over recent years. This column argues this shift is more profound than is commonly understood. It describes the private credit creation process, explains how the ‘money multiplier’ depends upon inter-bank trust, and discusses the implications for monetary policy…In the traditional money creation process, collateral consists of central bank reserves, in the modern private money creation process is in the eye of the beholder.”
