Banking System Interdependency Revealed: Implications for Economy and Risk Management
The article explains how banks create money through loans and deposits, which affects the entire banking system. Banks issue claims that act as money, help with payments, and increase the money supply through lending. They rely on inter-bank coordination to stay balanced and functioning. This process involves central banks, clearing houses, and the money market. The study highlights the importance of understanding the relationship between money, credit, and the real economy for maintaining a stable financial system.