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Capitalmind Podcast

How money gets created in India

Dec 5, 2023
This podcast breaks down the process of how money is created in India, explaining concepts without using jargon. It delves into topics such as money creation by central and commercial banks, the impact of inflation, the role of the Reserve Bank of India, the stock market, and the wealth effect.
01:06:28

Podcast summary created with Snipd AI

Quick takeaways

  • Commercial banks play a major role in creating money in the economy through lending and borrowing activities.
  • The stock market and housing market contribute to the expansion of wealth and money supply in the economy through the multiplier effect.

Deep dives

Money Creation through Central Bank and Banks

The podcast episode discusses the creation of money in the economy, starting with simple examples of how the central bank creates money and its impact on inflation. It explains that most of the money in the economy is created by commercial banks through lending and borrowing. The role of interest rates, reserve ratios, and incentives for money creation by banks is also explored. The episode highlights that the stock market and increasing stock prices contribute to the money supply by creating a multiplying effect. It emphasizes the concept of velocity of money and how interest rates contribute to the expansion of money supply in the system.

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Listen to the best highlights from the podcasts you love and dive into the full episode