Sometimes, what seems to be trivial for some, is a huge surprise for others. For instance, it has still not sunk in that banks cannot lend out reserves to the private sector, as described by a recent publication by Standard&Poors. Just in case there are still people around who believe that a central bank controls the quantity of reserves: no, it doesn’t. Not even in the euro zone. The ECB writes on its own website (my highlighting):econoblog 101
Repeat after me: the ECB does not control the quantity of reserves
Dirk Ehnts | Berlin School for Economics and Law
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