|
Credit money is money that is backed by a promise to pay made by
someone other than the state.
Examples of credit money include bank deposits and credit card loans.
During the Crusades in Europe, precious goods would be entrusted to the Catholic Church's Knights Templar, who effectively created a system of modern credit accounts. Over time this system grew
into the credit money that we know today, where banks create money by approving loans - although the risk and reserve policies of
each national central bank set a limit on this.
Sometimes, as in the U.S.A. during the Great Depression, trust
in bank policies drops very low and government must intervene to keep the industry of credit in operation.
This article is a stub. You can
help Wikipedia by expanding it .
See also
External links
|