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Banks as Accelerators of the Circulation of Money

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  • Laurent Le Maux

    (University of Paris Saint-Denis, rue de la liberté, 93200 Saint-Denis, France)

Abstract

The money multiplier approach asserts that banks are unique in that they implement a creation of money, while the finance approach regards banking institutions as financial intermediaries among others. In retrospect, Cantillon’s Essai stands between these two extreme approaches. It both challenges the money multiplier approach and grants to banks a significant monetary role. The aim of the paper is to clarify Cantillon’s theoretical propositions on bank issuing of debts convertible on demand into money at face value and to explore further the proposition according to which banks contribute to accelerating the circulation of money.

Suggested Citation

  • Laurent Le Maux, 2015. "Banks as Accelerators of the Circulation of Money," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 41(4), pages 537-546, September.
    • Handle: RePEc:pal:easeco:v:41:y:2015:i:4:p:537-546
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