The Role of Banks Most of what we have been using as money is issued by banks, in the form of credit to businesses and consumers. Banks originate this money after having underwriters rate the creditworthiness and solvency of the business or individual they are lending to. During boom periods, as economic activity grows, borrowers can qualify for larger loans – which expands the money supply. During recessions, especially depressions when people lose their jobs, the money velocity slows as p...
