Question

Role of bank in money and credit

Answer 1

Modern money consists primarily of two types of monetary instruments: cash money and bank money. The modern banking system transforms heterogeneous privately issued debt-credit instruments into homogeneous debt-credit instruments – bank money. The creation of this type of money has been understood to be the result of an inter-temporal exchange transaction between parties since the earliest influential discussions on modern bank money, yet it is conspicuously absent in contemporary explanations.