In essence, he was directly battling the British central banking system in its attempt to keep the pound artificially competitive in foreign exchange markets.
Money creation is a joint exercise between the central bank and the banking system.
Ten years ago branch networks were decided by the Bank of Italy, the central bank, lending was tightly regulated and two-thirds of the banking system was in the hands of central or local government.
Back then, as central banks all over flooded the banking system with cash, the Fed wanted banks to step up to the window and keep money flowing.
As I have pointed out before, where a national central bank presides over one national banking system, you can draw a distinction between propping up solvent - but illiquid - banks - and propping up governments.
The aim of this move appears to be to increase interest income for depositors under the state-dominated banking system, where the central bank sets guidelines for interest-rate levels.
Despite several rate cuts by the Federal Reserve, and additional efforts by the central bank to pump cash into the banking system to ease the credit crunch, banks are still finding the need to raise additional capital by either slashing their dividend, as National City Corp. did last week, or selling stakes to outside investors.
Despite several rate cuts by the Federal Reserve, and additional efforts by the central bank to pump cash into the banking system to ease the credit crunch, banks are still finding the need to raise additional capital by either slashing their dividend, as National City Corp. (nyse: NCC - news - people ) did last week, or selling stakes to outside investors.
Quarter-end balance sheet preparations are exacerbating the phenomenon, even as the world's central banks continue to pump cash into the banking system.
Also, the central bank and the (fractional reserve) banking system would face a nearly irresistible temptation to use their ability to create money to hold the deflation at bay as long as possible.
It was here that the unelected, largely unknown and unaccountable nabobs of central banking actually began to fix the global monetary system in a series of ad hoc and highly irregular deals with each other.
Mr Fichtner disputes the central argument that restructuring would imperil Europe's banking system.
European Central Bank officials said Friday that strains on the EU banking system have eased in recent months, but said more work needs to be done in the coming months.
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In a normally functioning economy, when the central bank buys government bonds, it injects money into the banking system where it will be lent out, facilitating growth.
In the end the European Central Bank reacted to stop an impending credit crunch in the banking system, injecting hundreds of billions of euros into the system, liquefying the banks.
Even if interest rates hit zero, they argue, central banks can use other measures, such as flooding the banking system with money, buying government bonds or intervening in the currency markets.
There is some evidence that the usual pattern of these loans is they find their way to the central government and the debts get rolled over by the local municipal banking system.
For what seems to be the first time since the days following Sept. 11, 2001, the European Central Bank has felt compelled to supply extra cash to the Continental banking system to calm market fears.
Japan's Central Bank responded to the rout by pumping billions of dollars into its banking system.
Well the European Central Bank has just pumped an astonishing amount of new loans into the banking system.
One important indication is that the central bank is allowing a large amount of cash to slosh around the banking system, a situation that may spur inflation because it makes borrowing cheap.
Mr. Chidambaram also said that he expects the central bank to take steps to address the shortage of liquidity in the banking system when it meets to review its monetary policy Tuesday.
Iraq's nascent banking system would know it could not be bailed out by the central bank and would thus be more prudent in lending policies.
The only significant decline in the demand for oil and other commodities will come from Europe as we begin to see the European banking system implode due to exorbitant leverage and the ineptness of the European Central Bank and the IMF to solve the crisis.
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In the other corner, global central banks are forcefully trying to counter these deflationary pressures by providing excess liquidity into the banking system via numerous forms of money printing.
Of course, all the people in banking and finance, not to mention the overlords of the monetary system at the central banks, would absolutely hate it.
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Once again the Fed and global central banks have come to the rescue in a coordinated act to shore up confidence in the global banking system.
As finance minister and head of the central bank, he has cut taxes and liberalised the pension system, in addition to opening the banking sector to foreign competition.
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For the world's leading central banks, the action is all in "unconventional measures" to support the economy and the banking system: like the UK's latest round of quantitative easing, or "operation twist" by the US Federal Reserve.
The links that Bitcoin-Central, and other exchanges who have also applied to be PSPs, will have to the global banking system will make that much easier as it will become possible to transact with a bitcoin account just like any other bank account.
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