Banque de France

Central bank asset purchase programmes: how is money created and then destroyed?

13 October 2023
Billets en bandes

Bulletin No. 248, article 1. Over the last decade, central banks have made extensive use of asset purchase programmes to tackle a number of crises. In addition to their impact on interest rates, these programmes have led to a mechanical and temporary increase in the amount of money in circulation in the economy. This article explains how the creation of central bank money, i.e. money exchanged in a closed circuit between the government, the central bank and commercial banks, is combined with the creation of commercial bank money held by businesses and households. …