Banking System


The operation of the banking system is a significant influence on the monetary system in which it operates.


To fully understand how the banking system operates one must understand some of the details of the operations of banks. This includes what we refer to as retail banks, central banks, and banking legislation. Banks also provide the money creation mechanism and we must understand that clearly.


Bank Structure

In order to understand what banks can and cannot do, one needs to understand the structure of banks.

Federal Reserve System

The Federal Reserve also his limits as to what they can and cannot do as a part of monetary system.

Creation of Money (Summary)

In this section, I describe in detail the process by which money gets created.

Banking Legislation

The power of banks and the Federal Reserve system depends on authorities granted to them by banking legislation. Understand how banks operate under federal (and sometimes state) charters.