China lets yuan break 7-per-dollar level for first time in over a decade

Re:China lets yuan break 7-per-dollar level for first time i... by rags2riches on Monday August 05, 2019 @10:25AM (#20614451)

Yes, there are of course limits to bank lending. Ultimately, the limiting factor is the ability of banks to make profitable loans. The capital and the reserves will follow if the profitable loans are there.

The money lent does not go away when the check or whatever is cashed at another bank. The reserves follows the check. We're just working with more balance sheets now.

As long as the loan asset remains in the books, it earns interest which will add to bank equity.

We can keep bringing up details, but the basics remain the same. Bank lending creates money.

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Re:China lets yuan break 7-per-dollar level for first time i... by kgwgk on Monday August 05, 2019 @10:37AM (#20614548)

We agree, money (under various definitions) is created within limits.

In fact banks also create money when they take cash deposits (and destroy money when they hand out cash).

If I deposit a $100 bill into a bank we’re increasing the money supply because I have $100 and so does the bank (until it spends it, trades it for a non-money asset or lends it out).

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