Friday 14 December 2018

Money talk

• In response to the issue of "how to find new revenue in a low-growth world" (Ben Hirschler's article, Irish Independent, January 23) you could start by analysing where money comes from. The media constantly reminds us that money is printed and minted, and yet cash and coins account for a mere 3pc of the eurozone's money supply.

The other 97pc is digital and exists as the numbers in our bank accounts. Simply put, digital money comes from bank loans because banks create the money they lend by typing new money into a borrowing customer's current account. Finding new revenue when few are willing or able to get a bank loan is indeed a problem.

The other important issue alluded to in the line quoted above is why there seems to be a constant need for new money.

Many people believe we have "everlasting" money once it's created. However, when banks process loan repayments, the (digital) money used to settle the debt no longer exists.

Paul Ferguson
Stoneybatter, Dublin 7

Irish Independent

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