The Bundesbank article causes it to be clear that bank financing is certainly not reserve-constrained.

Geldschopfung erfolgt zunachst unabhangig von bestehenden Zentralbank-guthaben der Banken … Geldschopfung zeigt im Besonderen, dass die Kreditvergabe ohne that is grundsatzlich Zu usse von Kundeneinlagen statt finden kann.

Or, “Money is first created in addition to the banking institutions’ existing bank balances …” during the main bank and that bank “lending can invariably happen without previous inflow of consumer deposits. ”

The Bundesbank claims that this understanding:

Dies widerlegt einen weitverbreiteten Irrtum, wonach die Bank im Augenblick der Kreditvergabe nur als Intermediar auftritt, additionally Kredite lediglich mit Mitteln vergeben kann, die sie zuvor als Einlage von anderen Kunden erhalten hat.

Or, this understanding “rejects the widespread error” that sees the financial institution as a intermediary allocating loans with funds “previously received as deposits off their customers”.

Therefore the indisputable fact that gathering bank that is central (reserves) will allow commercial banks to enhance loans is dismissed as lies as is the theory that the financial institution depends on build up to help make loans – two central propositions of traditional monetary theory that MMT has exposed into the past.

And also this bears in the arguments at the beginning of the crisis that Quantitative Easing would make it possible to expand loans since it would expand bank reserves.

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