WhatsApp The essay competition targeted Liberian youths between the ages of 18 and In addition to the cash prizes, all three finalists will have the opportunity to work as interns with the World Bank and International Finance Corporation IFC in Liberia. In remarks, Deputy Education Minister for Administration, Aagon Tingban, reminded the World Bank Group and essay competitors that the contest speaks to the foundation of what the ministry is all about.
October 29, As many of you know, I have spent much of the last seven years explaining to anyone who will listen that banks do not "lend out" deposits or reserves. Rather, they create both loan assets and matching deposit liabilities "from nothing" by means of double entry accounting entries.
Creating money with a stroke of the pen or a few taps on a computer keyboard is what banks do. But this does not mean that the money that banks create comes from nowhere. It is only created when they lend or when they purchase assets, which is equivalent to lending. As Pontus World bank essay competition 2007 explains in a comment on my previous blogpostwhat banks do is liquidity transformation - exchanging long-term illiquid assets for short-term liquid ones: How do private banks create money?
They create a deposit.
But as with currency pegs, such exchange rates can only be maintained if the bank has a healthy asset side on the balance sheet, and sufficient reserves. But did the bank create this deposit out of nothing? No, it created the deposit out of an asset; a loan. That is not "out of nothing".
In fact, it's very far from it; a more accurate description is that the bank converted an illiquid asset the debtor's future ability to repay into a liquid one.
It would be insolvent.
This is not creating money "from nothing". It is exchanging new money for assets. At the end of the lending transaction, there is an illiquid asset on the bank's balance sheet that wasn't there before, and an equivalent amount of new money in the customer's demand deposit account.
We could call this commercial bank QE, if you like - except that for commercial banks, it is not in any sense "unconventional" policy, as it is for central banks.
For commercial banks, it is their entire purpose. If they didn't do this liquidity transformation, they would not be banks. All money that banks create is their own liability towards a third party - in other words, it is debt. This debt money is always backed by an equivalent claim on the income and, as a last resort, goods of a third party.
The problem for banks is that the debt they owe to their customers as a consequence of lending is short-term and highly liquid, whereas the debt their customers owe to them as a consequence of lending is long-term and illiquid. When the customer draws down a loan - or, for that matter, when a customer draws any money from their deposit account, whether or not it is created through lending - the bank must have sufficient cash, or liquid assets readily exchangeable for cash, to pay them.
But banks don't keep much in the way of liquid assets: Therefore, although banks create money when they lend, they still need to borrow money when they make payments.
It is bad accounting to assert that "banks create money when they lend" without recognising the funding problem caused by liquidity transformation. So although we often say banks create money "from nothing", what we really mean is that they create money from lending.
And the purpose of the lending is completely irrelevant. Money created for purposes that Zoe Williams in the Guardian dubs "unproductive", such as mortgage lending, is just as much money in circulation as money created for what she calls "productive" lending to corporations.
Who are we to judge what is "productive" and "unproductive"?I have long called myself a social conservative. I think it is very important to have standards for behaviour (etiquette) and defined roles.
The problems with this system is not that it exists, but the lack of flexibility and the value placed on them. 🔥Citing and more!
Add citations directly into your paper, Check for unintentional plagiarism and check for writing mistakes. B. Governance: “Since the World Bank was established over 60 years ago, its role in supporting economic and social development has expanded and deepened with changes in the global context and the evolution in the financial architecture”(Jeff, ).
(You Might Also Like: 5 Worst U.S. Presidents of All Time) In an essay in the National Interest magazine in the summer of (“A World Without the West,” July/August ), we argued that. FREE COURSE THE WORLD, THE JEWS AND THE SCIENCE OF HUMAN SURVIVAL Anti-Semitism, division, separation, violent conflicts and a general breakdown of the institutions of human society.
The American Empire. By Wade Frazier. Revised July Purpose and Disclaimer. Timeline. Introduction. The New World Before “Discovery,” and the First Contacts.