How can commercial banks create money

Reference no: EM131227834

1. (Liquidity Versus Profitability) Why must a bank manager strike a balance between liquidity and profitability on the bank's balance sheet?

2. (Creating Money) Often it is claimed that banks create money by making loans. How can commercial banks create money? Is the government the only institution that can legally create money?

Reference no: EM131227834

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