How Money Is Created

EDUCATIONAL CONTENT — NOT FINANCIAL ADVICE. Capital at risk: investments can fall as well as rise and you may get back less than you invest. This video is for information only and is not a recommendation to buy, sell or hold any investment. Past performance is not a reliable indicator of future results. No one involved in making it is authorised by the Financial Conduct Authority.

How Money Is Created

WHERE DOES MONEY COME FROM?

Where does the money for a mortgage actually come from? This documentary follows one home loan and one business loan through commercial-bank balance sheets, central-bank reserves, repayments, interest rates, quantitative easing, government spending, taxation, bonds and inflation.

It explains why lending creates deposits, why repayment destroys deposit money, why reserves are different from the money in a current account, what constrains banks, and why creating money is not the same as creating real wealth.

Runtime: 21.4 minutes.

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