How does the bank really create money?
Simple – they just write a cheque, or they make a book or computer entry. The banks don’t even have to have any money of their own, one bank writes a cheque, the other banks have to accept it – according to the Canadian Payments Association clearing rules. This acceptance by the other banks (although they are all realistically one bank) protects the issuing bank from criminal prosecution for false pretence, an indictable crime punishable for up to 5 years. If no one complains, there is no crime. This is how our legal system works. To understand more regarding this subject from the bank’s standpoint, please read Modern Money Mechanics published by the Federal Reserve Bank of Chicago. Remember that the Bank of Canada is considered the “13th Federal Reserve District” and therefore the material applies to the Canadian Banking system as well. http://www.worldnewsstand.net/money/mmm2.html Download an excellent book by David Healing – “THE INSIDIOUS COIN” http://members.shaw.ca/theinsidiousco
Simple – they just write a cheque, or they make a book or computer entry. The banks don’t even have to have any money of their own, one bank writes a cheque, the other banks have to accept it – according to the Canadian Payments Association clearing rules. This acceptance by the other banks (although they are all realistically one bank) protects the issuing bank from criminal prosecution for false pretence, an indictable crime punishable for up to 5 years. If no one complains, there is no crime. This is how our legal system works. To understand more regarding this subject from the bank’s standpoint, please read Modern Money Mechanics published by the Federal Reserve Bank of Chicago. Remember that the Bank of Canada is considered the “13th Federal Reserve District” and therefore the material applies to the Canadian Banking system as well.
