> (email exchange)
> On Sun, Jan 16, 2011 at 12:34 PM, qrote:
> Had you heard about this?
Yes and no:
“A spokesman for the ECB said the Irish Central Bank is itself creating the money it is lending to banks, not borrowing cash from the ECB to fund the payments. The ECB spokesman said the Irish Central Bank can create its own funds if it deems it appropriate, as long as the ECB is notified.”
My understanding is that rather than keep all the member bank accounts themselves, the ECB utilizes the existing member nation Central Banks as their designated agents for transactions purposes.
So the member banks in the euro zone have their clearing accounts with their national banks.
That means funding for the member banks comes via credits to their accounts at their local central bank, and it’s the personnel at those local central banks, like the Irish Central Bank, who enter the actual debits and credits for the member bank accounts.
In the case the ‘money that’s being created’ is describing secured lending to the member banks as per ECB policy and directive, with the Irish Central Bank making the actual debits and credits to the Irish commercial bank accounts on their books.
It’s somewhat like the US where the NY Fed, for example, keeps the books for it’s member banks.