Post-keynesian approach to independence of central bank and function of commercial banks

The post-Keynesian approach to the nature of money brings some other conclusion to the monetary policy, independence of a central bank and function of commercial banks. The source money is created by demand of businessmen especially. Loans create deposits, deposits create reserves. Central bank plays two roles: lender of last resort and inflation supervisor. Creditting by commercial banks and their credit policy in post-Keynesian economics is considered as credit rationing. If the role of central bank - lender of last resort - is not connected with changes of regulation, which reduce new practice of financial markets to avoid regulation, the influence of central bank to fight with inflation declines. Post-Keynesian economics is not directed against competence and independence of central bank. On the contrary, it welcomes the more direct influence of central bank on commercial banks and other financial institutions, however, with use of alternative limiting facilities

Bank rate · Central bank · Chinese financial system · Credit channel · Credit rationing · Economics · Financial system · Forward guidance · Independence (probability theory) · Inflation (cosmology) · Inflation targeting · Interest rate · Lender of last resort · Macroeconomics · Monetary base · Monetary economics · Monetary policy · Monetary reform · New Keynesian economics · Official cash rate · Open market operation · Post-Keynesian economics · Economic Theory and Policy