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 how does malaysia print their money ?, compare to US...

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METALRAGE
post Dec 23 2015, 12:25 PM

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On the original question by TS: "How does Malaysia print their money?"

For clearer understanding, there are 2 types of money that can be created:
1) Base money (aka hard currency)
2) Fiat money

Base money is the actual amount of currency (money backed by real notes / coins etc.) plus the "cannot be lent out" reserves that banks must keep with the central bank.

Fiat money is "fictitious" money that only exists as digital accounting entries. It is created as a result of bank lending (you can read about it on the internet how lending creates money). Fiat money adds to the money supply without having any real physical currency.

When you say print money, usually, it means creation of new base money. It is achieved via a mix of (you guessed it) printing new currency and distribution to the wider economy via central bank lending to commercial banks or governments.

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All the other discussions here re. inflation, SG / Msia debt etc is irrelevant to your question.

 

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