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"When banks extend loans to their customers, they create money by crediting their customers' accounts Mervyn King, Governor of the Bank of England (23 October 2012) Where does money come from? reveals how the bulk of today's money supply is created and allocated by commercial More...banks in their role as providers of credit. The fact that private banks can create money is understood by central banks, but little known by the public. The authors argue that this system is inherently unstable, with little effective regulation of how much credit is provided, or whether it is used for productive or speculative purposes. Based on detailed research and consultation with experts, including from the Bank of England, Where does money come from? reviews theoretical and historical debates on the nature of money and banking and explains the role of the central bank, the Government and the European Union. This Second edition includes new sections on Libor and quantitative easing in the UK and the sovereign debt crisis in Europe. Praise for Where does money come from? Refreshing and clear. The way monetary economics and banking is taught in many - maybe most - universities is very misleading and what this book does is help people explain how the mechanics of the system work. David Miles, Monetary Policy Committee, Bank of England It is amazing that more than a century after Hartley Withers's The Meaning of Money and 80 years after Keynes's Treatise on Money, the fundamentals of how banks create money still need to be explained. Yet there plainly is such a need, and this book meets that need, with clear exposition and expert marshalling of the relevant facts."