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Currency exists issued by the Central Government while money is assembled by a commercial bank. when it creates a loan Currency can be used to create payments and directly exchanged for goods and services while money exists only indirectly exchanged for goods and services.
What is the difference between currency and bank money?
Currency exists as a physical medium of exchange The most standard forms of currency utilized in the U.S are paper money and coins Bank money also understood as demand deposits exists as a form of credit that banks can make through lending Both currency and bank money are formed by the government but these two kinds of money differ in how they're constructed and their objective.
Currency exists issued by the Central Government while money is assembled by a commercial bank. when it creates a loan Currency can be used to create payments and directly exchanged for goods and services while money exists only indirectly exchanged for goods and services. A borrower may utilize the money he has borrowed from a bank to buy goods or services from someone else.
The individual who ultimately buys these goods or services with the money will then deposit that sum in his bank account thereby constructing more money in the banking system.
- The Bank of Canada creates further money through asset purchases of corporate and government bonds or securities.
- The Bank of Canada also makes new money by issuing notes and currency.
- The Bank of Canada can influence monetary conditions by adjusting the capital requirements banks require to hold as reserves.
To learn more about bank money refer to:
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