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Copyright of Journal of College of Sharia & Islamic Studies is the property of Qatar University and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Leviathan: Zeitschrift für Sozialwissenschaft (Nomos Verlagsgesellschaft mbH & Co. KG) is the property of Nomos Verlagsgesellschaft mbH & Co. KG and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: Bank lending is the major source of monetary expansion. Bank-led money creation is a key issue in both conventional and Islamic financial systems. The purpose of this paper is to examine the issues related to Islamic banking money creation. In this conceptual paper, the authors investigate the involvement of profit and loss sharing (PLS) in money creation and especially how can PLS limit money creation "out of nothing." In this regard, the authors examine the potential of the PLS principle in tackling the excessive money creation phenomenon. Design/methodology/approach: This study uses a normative approach regarding Islamic bank money creation that fits Sharia directives. In fact, this study discusses "what ought to be," that is, the values and norms of PLS money creation that impede excessive money creation. Findings: Overall, Islamic banks create money differently compared to conventional ones. Especially, by avoiding a purely financial intermediary, money creation under the PLS principle sustains a strong relationship with the real economy and leads to a lower money multiplier. Therefore, PLS mechanisms allow financing through real assets and not credit assets "out of nothing." This could prevent excessive money creation from causing harmful effects on indebtedness and financial instability. Practical implications: PLS offers a valuable resolution for banking system money creation through the optimization of Islamic bank financing by facilitating the separation of the monetary function from the credit one. This reform thought reinforces the stability value of money allowing it to fully perform its functions with reference to the directives of Sharia. This especially allows the integrity and purchasing power of money, the reduction of the gap between the evolution of both real and financial economies and, consequently, the indebtedness and crisis. It is recommended to promote PLS financing by reforming institutional and regulatory constraints. Originality/value: This study addresses the contemporary issue of money creation by Islamic banks through the PLS approach. The conceptual framework of this paper highlights the reformist role of PLS in limiting money creation through Mudarabah approach within fractional reserve banking. [ABSTRACT FROM AUTHOR]

Objectives: This study aims to identify and analyse the forms of infringement on the sovereign right of public authority in the issuance and management of currency, particularly in the context of the fractional reserve banking system and the technological advancements facilitated by globalisation, which have enabled the creation and promotion of virtual currencies. Methodology: The study adopts a composite method that combines historical induction and logical reasoning to explore the forms of infringement on the general jurisdiction of the authority associated with both traditional and emerging forms of currency. Findings: The study concludes that safeguarding public authority's exclusive and disinterested right in currency issuance and management is a priority in Islamic legal policy. Such necessitates caution against forms of infringement that violate this right due to their impact on the fairness and efficiency of the monetary system. Originality: This research's originality lies in its characterisation of the generation of credit money and the issuance or mining of virtual currencies as contemporary forms of infringement on the authority's general jurisdiction, akin to the counterfeiting of paper money.

This paper investigates the implications of bank money creation by developing a New Keynesian model that incorporates price rigidity and financial frictions but without real rigidities. Banks play a dual role as intermediaries of loanable funds and creators of credit. Their unique ability to create credit stems from the acceptance of their liabilities as a medium of exchange by economic agents. While the microeconomics of banking literature has addressed this function as liquidity transformation, there is a lack of macro-level analysis on this topic. We compare our baseline model with two alternative models: one featuring banks solely as intermediaries of loanable funds and another based on deposit multiplier models. Our model demonstrates that when banks have access to investment deposits held by households, their money-creation power predominantly affects nominal variables in the economy.

Bank regulations affect the behaviour of credit and money creation; hence, they are essential for economic growth and stability. This paper develops an analytical model of the monetary circuit to show the macroeconomic effects of money creation under bank regulations. It describes the equilibrium in which banks create money in accordance with capital adequacy ratios or net stable funding ratios. This study reveals the equilibrium economic growth rate and debt level. In addition, this paper demonstrates how bank regulations influence firm capital structures, and the conditions for firms using debt and filing for bankruptcy. Results show that bank regulations can transfer risk from banks to firms. In fact, this study identifies a channel through which banks actively influence the macroeconomy through their money creation. [ABSTRACT FROM AUTHOR]

Andrew Jackson and Ben Dyson made in 2012 a proposal for banking sector reform, which aimed at eliminating the ability of commercial banks to create money. They claim that their proposal would return the monopoly of money creation to the state, would reduce the debt level in society, and in turn would end the need for expensive bail-outs of too-big-to-fail banks by taxpayers. This paper will discuss the theory-external post-Keynesian criticism of the reform proposal as well as a theory-internal criticism, which focusses on the impact of this proposal for the banks' customers, the commercial banks and the taxpayers. The analysis will show that Jackson and Dyson's proposal is not a progressive solution but a Trojan Horse. [ABSTRACT FROM AUTHOR]

In recent years, a number of different strands within heterodox economic thinking have successfully provided more empirically robust and sociologically informed analyses of how money gets created. However, there is a tendency within these analyses to discuss the different money creation theories and institutional practices in isolation, inhibiting a broader audience from grasping the whole institutional picture. By integrating contemporary heterodox theories and the latest empirical evidence, this article therefore attempts to develop a "landscape" view of modern money creation that visualizes and explains the different ways that modern money is created. It suggests that, while it is ultimately only commercial banks that can "create" new bank deposits in customers' accounts, this may be initiated by one of three institutional mechanisms: by customers "borrowing new money into existence" when commercial banks make loans; by central banks creating new money when they purchase assets such as government bonds from investors; and by the government "spending new money into existence". The article also reflects on how a clearer institutional understanding of these processes may be helpful in improving our overall capacity to think about how money creation may better serve current urgent social and environmental needs, especially in the post-COVID-19 context. [ABSTRACT FROM AUTHOR]

Today’s financial and banking systems are built on fractional reserve banking. This article sheds light on the role of commercial banks with regards to money creation/production under this system of fractional reserve banking. After exploring the nature of the process of money creation/production, the research paper diligently scrutinizes this process through the lenses of legal and religious moral precepts and ethic. The article concludes, with solid supporting arguments, that money creation/production under fractional reserve banking is immoral, ethically wrong and harmful at both individual and societal levels, with numerous legal and religious violations at its core.

This study examines the relationship between money creation and the rule of law as two social institutions effective in economic growth and development. Money is created in the context of laws, and therefore it is stated that if there is the rule of law, it will not be possible to expand the money supply; on the other hand, the creation of money and the resulting inflation alter the distribution of income and relative prices and, consequently, affect private property, increase the incentive to engage in non-market activities and government intervention in the economy, and in this way affects the rule of law. Following the study of the relationship between these two variables and the discovery of the causal relationship, using the data of the rule of law of the World Bank and the volume of liquidity in the period 1996 to 2020 for Iran, using Engle Granger method and vector error correction model (ECM), it was found that in the short run, there is a negative and two-way causal relationship between the rule of law and the amount of liquidity. However, in the long run, there is a negative relationship between the volume of liquidity and the rule of law, and causality is established from the volume of liquidity to the rule of law. In other words, the increase in liquidity has reduced the rule of law in Iran.

Today's financial and banking systems are built on fractional reserve banking. This article sheds light on the role of commercial banks with regards to money creation/production under this system of fractional reserve banking. After exploring the nature of the process of money creation/production, the research paper diligently scrutinizes this process through the lenses of legal and religious moral precepts and ethic. The article concludes, with solid supporting arguments, that money creation/production under fractional reserve banking is immoral, ethically wrong and harmful at both individual and societal levels, with numerous legal and religious violations at its core. [ABSTRACT FROM AUTHOR]

Because of the role that commercial banks play in today's financial and banking system, this article discusses the activity of commercial banks with regard to how money (commercial bank money) is created. By exploring the nature of the fractional reserve banking system, this article establishes that commercial banks are not mere financial intermediaries but rather exclusive money creators. A critical legal analysis of this money creation process concludes, with solid supporting arguments, that commercial bank money is riddled with legal violations and harmful socioeconomic effects, which are inevitably borne by the individual and society in the form of 'privatizing the profits of money creation' and 'socializing the losses and its outrageous financial burden'. [ABSTRACT FROM AUTHOR]

In this study, it is explained that the perception of the conventional economics of the bank as an intermediary institution of funds, while not conforming to reality, distorts the analysis of monetary fluctuations and subsequent economic turmoil; but in the alternative approach, the bank, as the most important player in the monetary system, has the power to create flexible credit. The specific question of the present study is whether it can be said that in the current form of the monetary and banking system, the interests of the bank and society are inherently in conflict with each other. To answer the above question, the library and documentary method has been used and Finally, it is concluded that the bank is an institution that can outsource the costs associated with the flexible and irregular expansion of credit and affect the economic interests of individuals in society, and in return, gain the benefits of creating credit; This important result is based on Minsky's explanation of the dynamics of bank-firm relations; In his view, the internal mechanisms of the money manager capitalism and specifically the way the firm and the bank interact, cause "stability to create instability". The result of the current research is that, firstly, the conflict between the interests of the bank and the society is the natural outcome of the unrealistic understanding of the conventional economic knowledge of the "bank", and secondly, the examples of this conflict can be seen in three recurring periods: 1. Before the appearance of the initial signs of the monetary and banking crisis. 2. After the initial signs of the crisis appear. 3. The occurrence of a widespread crisis and its spread to other sectors of the economy.

Despite recent clarifications by central banks that it is indeed commercial banks that are the main creators of the money supply, money creation processes remain as confusing and opaque as ever to many. This article develops a simplified macro-visual diagram of today's money system based on the increasingly accepted "credit theory" of money creation. It aims to explain not only how money is created and which institutions have the authority to create it; it also aims to discuss the implications of this understanding of money creation for wider issues, such as political sovereignty, inequality, and socio-economic development. Ultimately, it aims to provide a pedagogical resource upon which both technical and normative discussions about our current money system among academics, activists, and students can be based. [ABSTRACT FROM AUTHOR]

Copyright of Social Science Information is the property of Sage Publications, Ltd. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

ABSTRACT The aim of this article is, on the one hand, to analyze, based on Keynes’s ideas, the relevance of money creation and public debt to mitigate the Covid-19 economic crisis, and, on the other hand, it analyses the role of conventions in this context.

Following the coronavirus outbreak, and especially before inflation became a key factor in this period, several crisis management proposals raised the possibility of a universal basic income, which could be backed by the central bank's money creation. The following paper is an essay that seeks to grasp the political economic meaning and implications of the propositions related to helicopter money and basic income. We cannot avoid observing the essence of these proposals, presented fundamentally as a distribution-related issue, in the historical context of value, work and money creation. Helicopter money appears in this light as a new paradigm of extensive growth, which at first glance comes off as a financial innovation, but paradoxically rather bears a relationship with a pre-capitalist conception of value. Moreover, helicopter money is a wage-substitute transfer that does not respond to the social and symbolic void that has replaced work. It appears to be a welfare instrument, while it can only rest on the separation of production and consumption on a global scale. Helicopter money is an extension of quantitative easing by other means, which unveils the motives for money creation. It is an overture to the thought experiments of 'value without work' and 'economy without people'. [ABSTRACT FROM AUTHOR]

We establish a benchmark result for the relationship between the loanable-funds and the money-creation approach to banking. In particular, we show that both processes yield the same allocations when there is no uncertainty. In such cases, using the much simpler loanable-funds approach as a shortcut does not imply any loss of generality. When there is aggregate risk with complete contracts and complete markets, we indicate that a restricted equivalence result holds. [ABSTRACT FROM AUTHOR]

In 2015–16 in Valle d'Aosta – a small autonomous region in northwestern Italy – some local politicians entered into dialogue with each other and the population on the suitability of a complementary currency in the regional territory. Despite the willingness of the promoters, the complementary currency was not launched in the end, partly for contingent reasons (regarding, inter alia, the definition of new political priorities and alliances), partly because of issues that were structural in nature: i.e. lack of structural embeddedness hindering collective action, inter-group ties and personal trust; and a low degree of institutional trust and of institutional transparency. Taking this case into account, this article aims to deepen understanding of the socio-institutional conditions that may favor or, on the contrary, hinder monetary innovation in a local context. Specifically, we highlight the lack of compactness of the proposal – concerning objectives, timing and territorial scale of implementation – and the emergence of a logic of competition with other political and entrepreneurial actors of the territory as the main weaknesses of the project. Furthermore, we show that a balance between the public and private spheres, leading to a heterophile and polycentric network, is needed in order to facilitate the implementation of a complementary currency.

The study aims to explore stakeholders' perceptions on alternative money creation for commercial bank money lending activities in Malaysia. A phenomenological approach was employed to examine the stakeholders' perception through experience sharing. Data were collected using a semi-structured interview approach among 10 consenting individuals from different stakeholder groups. The study revealed respondents' two opinions on possible alternative money creation for commercial bank money lending activities. First, fiat money should be removed from the monetary system. Second, money backed by real assets such as gold and silver should be issued and controlled only by Bank Negara Malaysia (BNM). Moreover, other respondents highlighted that the accounting entry for commercial bank money lending needs should align with the accounting entry of non-bank or trading institutions. Thus, the scope of commercial banks to create money in the lending system will be reduced. Significantly, as long as the central bank can control commercial bank money lending activities through its various mechanisms, money creation is not a big issue but finance quality is. The study could be the basis of for essential future research due to the lack of research on the subject. Additionally, future studies can investigate views of the key regulator (BNM) and other respondents' arguments. [ABSTRACT FROM AUTHOR]

We study today's two-tier money creation and destruction system: Commercial banks create bank deposits (privately created money) through loans to firms or asset purchases from the private sector. Bank deposits are destroyed when households buy bank equity or when firms repay loans. Central banks create electronic central bank money (publicly created money or reserves) through loans to commercial banks. In a simple general equilibrium setting, we show that symmetric equilibria yield the first-best level of money creation and lending when prices are flexible, regardless of monetary policy and capital regulation. When prices are rigid, we identify the circumstances in which money creation is excessive or breaks down and the ones in which an adequate combination of monetary policy and capital regulation can restore efficiency. Finally, we provide a series of extensions and generalizations of the results. [ABSTRACT FROM AUTHOR]

By the act of lending banks do not actually intermediate pre-accumulated real resources but rather create new financial resources in the form of deposits. Therefore, bank credit needs to be modelled as a monetary phenomenon, which directly fuels domestic demand and inflationary pressures. So far, there have been just a few attempts to model banks as monetary institutions in the DSGE model. In this paper we propose a simple DSGE model, which nevertheless accommodates banks as genuinely monetary institutions and captures banks' institutional ability to create money. Our model features a small open economy with nominal prices, savers and borrowers and a banking sector. Following an exogenously induced shock to banker's willingness to lend, the bank does not have to raise deposit rates or significantly increase borrowing from abroad as deposit dynamics closely resembles that of credit, which allows us to analyse real and nominal consequences of bank credit (and money) creation.

Theories of justice rely on a variety of criteria to determine what social arrangements should be considered just. For most theories, the distribution of financial resources matters. However, they take the existence of money as a given and tend to ignore the way in which the creation of money impacts distributive justice. Those with access to collateral are favoured in the creation of credit or debt, which represents the main form of money today. Appealing to the idea that access to credit confers freedom, and that inequalities in this freedom are morally arbitrary, this article shows how the advantage to those with collateral plays out in different ways in today's economy. The article identifies several forms of bias inherent in money creation, and its subsequent destruction: loans from commercial banks to individuals and corporations, interbank lending, lending from central banks to commercial banks, and selective bail-outs by central banks. These are not mere inequalities: they are unjust since alternative designs of the financial architecture exist that would significantly reduce them. The paper focuses on one possible reform with the potential to address several of the types of bias identified, namely the separation of money creation from private bank credit. [ABSTRACT FROM AUTHOR]

The aim of this article is, on the one hand, to analyze, based on Keynes's ideas, the relevance of money creation and public debt to mitigate the Covid-19 economic crisis, and, on the other hand, it analyses the role of conventions in this context. [ABSTRACT FROM AUTHOR]

Copyright of Vie et Sciences de l'Entreprise is the property of ANDESE and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

For the first time in the history of central banks, the Federal Reserve has been pursuing monetary policies which allow shadow banks to access its reserves. The paper examines these policies in an analysis based on the concept of security structure. The aim is to facilitate a better understanding of complex institutional arrangements which convert credit claims into money or enable them to simulate the money-form. As the financial crisis reached its peak in September 2008, the Fed was not able to contain the impact precisely because the security structure existing between banks and the Fed did not extend to the shadow banking system, which had meanwhile become thebackbone of the global financial system. To address this situation, the Fed initiated new security structures that were designed to also give players in the shadow banking system access to liquidity and collateral. The concept 'security structure' serves as an analytical tool to explore dynamic forms of safety and liquidity generation and to distinguish between credit expansion and money creation. It also helps to differentiate between three qualitatively different stages of security: central bank money, quasi-money and shadow money. In this way, it foregrounds the politics of (shadow) money creation. [ABSTRACT FROM AUTHOR]