The global financial crisis (GFC) moved banks and money to the centre of the public’s attention. The aim of this chapter is to move beyond the conventional account offered to law students and to show that banks and money give rise to a number of fundamental questions about how we order our society and distribute wealth. Whereas conventional economic accounts pay little attention to money, other, more heterodox accounts show that both central banks and private banks can create money out of nothing. The state relies on interest rates set by the central bank as well as banking regulation to prevent private money creation from resulting in economic and financial instability, but these tools are necessarily imperfect. The chapter then looks at the response of the state to the financial crisis, contrasting the politically driven arguments in favour of fiscal austerity with the more relaxed approach to monetary policy, which has further entrenched income and wealth inequality. We conclude with a call for more scrutiny of private banks and politicians.
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- The Law and Regulation of Banks and Money
- Macmillan Education UK
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- Chapter 11