Banque de France
Central bank asset purchase programmes: how is money created and then destroyed?
Mise en ligne le 13 Octobre 2023
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Bulletin No. 248, article 1. Over the last decade, central banks have made extensive use of asset purchase programmes to tackle a number of crises. In addition to their impact on interest rates, these programmes have led to a mechanical and temporary increase in the amount of money in circulation in the economy. This article explains how the creation of central bank money, i.e. money exchanged in a closed circuit between the government, the central bank and commercial banks, is combined with the creation of commercial bank money held by businesses and households. …