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Could anyone please comment on "Money creation in the modern economy" report and the information presented by the Bank of England? http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf They say that it is popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits. In conclusion: ..banks create money whenever they lend to someone in the economy or buy an asset from consumers. And in contrast to descriptions found in some textbooks, the Bank of England does not directly control the quantity of either base or broad money. So is it same process as in fractional banking but with 0% reserve requirements? Is it somewhat different in USA? Report also said "The Bank of England is nevertheless still able to influence the amount of money in the economy. It does so in normal times by setting monetary policy — through the interest rate that it pays on reserves held by commercial banks with the Bank of England. More recently, though, with Bank Rate constrained by the effective lower bound, the Bank of England’s asset purchase program has sought to raise the quantity of broad money in circulation." Here is Steve Keen explaining it: http://youtu.be/W_jc0cYCg14?t=15m2s (at the beginning he seems to be ignorant of Regression theory, but never the less...)