In the following link, you can see "loans to deposits ratio of EU countries"
https://www.euro-area-statistics.org/banks-balance-sheet-loans?cr=eur&lg=en&page=3&template=1
If you look at more detailed, this ratio was nearly %140 in the EU average in 2000 year.
However this ratio has declined from the 2008 to 2019
My question is
How can we explain this ratio in the context of the post keynesian monetary theory ? Because we expect that credits are equal to the deposits in the post keynesian monetary theory.
Sincerely
Engin YILMAZ
New money has not been created due to depressed demand and the velocity of deposits has decreased because of lower interest rates..
Interesting that you point that out.I wrote a paper which implicitly touches on this - it's about exogenous and endogenous monetary systems and their interaction. You can find it in my profile. Deposit creation through lending creates something that I refer to as "stranded money" - i.e. deposits which get stuck in the system when loans are not repaid. Take a look and let me know what you think.
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