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BIBLIOGRAPHY

What is money?

European Central Bank (explainer)

Claims Supported by This Source

  1. The euro is fiat money, declared as legal tender and issued by the central bank, and is not directly convertible into gold.
  2. There are two types of money: central bank money (banknotes and deposits held by banks at the central bank = reserves) and commercial bank money.
  3. Most of the money people actually use is commercial bank money, which is backed by bank assets and created by banks expanding their balance sheets. When a loan is repaid, the money created is extinguished.
  4. The three functions of money: medium of exchange, unit of account, and store of value. From M1 (currency and demand deposits) to M3.

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