[sambe]

I've skimmed this before and have to say I read it as the BoE absolving itself of responsibility. The popular stance is "blame the banks" and some people even believe that (commercial) bankers just print money (for themselves) whenever they feel like getting a nicer car.

Several places the paper state that the ultimate control of money creation is monetary policy i.e. not the banks. This is what I'd always thought before this idea of commercial banks having complete freedom became popular. It also states that the interest rate set by the central bank decides the rate of the loans, and thus the demand for them, and thus the amount of creation. Interestingly the link between the central bank rate and the commercial rate is not stated (I did not read it end-to-end). I always thought that ultimately they had to borrow from the central bank to remain solvent/meet reserve ratios. And that goes down as a debt to the central bank, whereas the central bank can genuinely create that loan from nowhere and is doing the creation.