WEBVTT NOTE The Non-Inflationary Great Leveraging 1 00:00:00.000 --> 00:00:30.000 So I would like to thank the organizer of the conference, in particular Professor Salerno, for giving me the opportunity to present my work today, even if I am a central banker, so it's relatively rare for having central bankers here, I think, but so the paper I present is entitled The Non-Inflationary Grade Leveraging, and it is a joint work with Maya Ganarin, and the usual disclaimer applies, the view expressed in this paper 2 00:00:30.000 --> 00:00:35.280 do not necessarily reflect the views of the Swiss National Bank. 3 00:00:35.280 --> 00:00:41.160 So the macroeconomic development in many OECD countries 4 00:00:41.160 --> 00:00:46.000 over the last 30 years provides an apparent conflicting 5 00:00:46.000 --> 00:00:49.920 assessment of the monetary policy stance. 6 00:00:49.920 --> 00:00:52.880 We can illustrate this apparent conflicting assessment 7 00:00:52.880 --> 00:00:55.240 with US data, but in that respect, 8 00:00:55.240 --> 00:00:57.760 the macroeconomic development in the US 9 00:00:57.760 --> 00:01:02.520 is very representative of any OECD countries. 10 00:01:02.520 --> 00:01:05.920 So on the one hand, you see on the chart of the left 11 00:01:05.920 --> 00:01:10.400 that inflation has been falling relatively low 12 00:01:10.400 --> 00:01:12.240 over the last 30 years. 13 00:01:12.240 --> 00:01:14.800 And this suggests that monetary policy 14 00:01:14.800 --> 00:01:17.920 has been restrictive over the last decades. 15 00:01:17.920 --> 00:01:20.280 And there is indeed a large literature 16 00:01:20.280 --> 00:01:23.360 supportive of the view that typically 17 00:01:23.360 --> 00:01:25.520 that monetary policy, for instance, 18 00:01:25.520 --> 00:01:30.320 violated the so-called Taylor Principle before the 1980s, 19 00:01:30.320 --> 00:01:34.120 but followed the Taylor Principle thereafter. 20 00:01:34.120 --> 00:01:36.960 Then on the other hand, if you look at the chart on the right, 21 00:01:36.960 --> 00:01:39.920 these show the US debt as percent of GDP. 22 00:01:39.920 --> 00:01:43.120 And these illustrations show that the financial system 23 00:01:43.120 --> 00:01:47.640 has been extremely expansionary over the last 30 years. 24 00:01:47.640 --> 00:01:50.600 And it is not obvious to understand 25 00:01:50.600 --> 00:01:53.680 why this huge increase in leverage 26 00:01:53.680 --> 00:01:57.520 has been accompanied by relatively low level of inflation. 27 00:01:57.520 --> 00:02:01.120 Because one may indeed expect the granting of credit 28 00:02:01.120 --> 00:02:04.160 to enhance aggregate demands, and therefore 29 00:02:04.160 --> 00:02:07.480 to exert inflationary pressure on the consumer price 30 00:02:07.480 --> 00:02:08.000 inflation. 31 00:02:08.000 --> 00:02:12.000 And this raises a question, as put by Clarida, 32 00:02:12.000 --> 00:02:16.400 as to why all this leverage and the rise in aggregate demand 33 00:02:16.400 --> 00:02:21.040 it supported did not result in inflation or, at minimum, 34 00:02:21.040 --> 00:02:25.240 a Rise in Inflation Expectation. 35 00:02:25.240 --> 00:02:28.120 So the aim of this paper is to provide the solutions 36 00:02:28.120 --> 00:02:29.840 to this dilemma. 37 00:02:29.840 --> 00:02:36.080 And basically, we just, the hypothesis of this paper 38 00:02:36.080 --> 00:02:41.760 just sets on quantities or positions on banks' balance 39 00:02:41.760 --> 00:02:45.120 sheets to explain why inflation has been so low. 40 00:02:45.120 --> 00:02:47.080 And to put it as simple as it is, 41 00:02:47.080 --> 00:02:50.140 inflation has been low because the quantity of money, 42 00:02:50.140 --> 00:02:52.140 as money should be properly measured 43 00:02:52.140 --> 00:02:56.100 has been low over the last decades. 44 00:02:56.100 --> 00:02:57.780 So in the conduct of monetary policy, 45 00:02:57.780 --> 00:03:01.220 the central bank orchestrates the development 46 00:03:01.220 --> 00:03:02.860 of the banking system. 47 00:03:02.860 --> 00:03:05.700 Now, the specificity of the fractional reserve banking 48 00:03:05.700 --> 00:03:09.780 system consists in the fact that it allows banks to grant credit 49 00:03:09.780 --> 00:03:12.980 simply by creating money. 50 00:03:12.980 --> 00:03:16.780 So when non-banks or capital markets grant credit, 51 00:03:16.780 --> 00:03:20.780 They simply lend money that someone has decided to save. 52 00:03:20.780 --> 00:03:22.860 So non-banks or capital markets are just 53 00:03:22.860 --> 00:03:25.860 true intermediaries between savers and borrowers. 54 00:03:25.860 --> 00:03:27.580 By contrast, when banks want credit, 55 00:03:27.580 --> 00:03:30.620 they create the money that they lend. 56 00:03:30.620 --> 00:03:34.700 So money and credit are two sides of the same coin, 57 00:03:34.700 --> 00:03:39.020 because banks supply both loans and deposits. 58 00:03:39.020 --> 00:03:43.180 So the question is, whether it is the asset side, that 59 00:03:43.180 --> 00:03:52.180 or the liability side, money of banks balance sheet that matters for the determination of aggregate demands and inflation. 60 00:03:52.180 --> 00:04:03.180 And this is an old question because the evolution of the banking system over the last centuries created difficulties for the exponent of the quantity theory 61 00:04:03.180 --> 00:04:12.180 to adjust their theory to the new mechanism of exchange and to specify the money stock variable which is so essential to this theory. 62 00:04:12.180 --> 00:04:18.900 For example, David Leidler writes that in the middle of the 19th century, John Stradmill 63 00:04:18.900 --> 00:04:25.020 could not make up his mind whether it was bank credit per se or its counterpart liabilities 64 00:04:25.020 --> 00:04:27.420 which affected prices. 65 00:04:27.420 --> 00:04:31.100 And still today there is a lot of confusion in the economic professions to know whether 66 00:04:31.100 --> 00:04:37.500 it is money or credit which is relevant for the determination of aggregate demand. 67 00:04:37.500 --> 00:04:42.780 But this confusion between money and credit can be easily explained because in the fractional 68 00:04:42.780 --> 00:04:47.980 reserve system you may expect money and credit to expand in the same proportion. 69 00:04:47.980 --> 00:04:55.420 However, since the 1980s, monetary aggregates have expanded much slower than their credit 70 00:04:55.420 --> 00:04:56.620 counterparts. 71 00:04:56.620 --> 00:05:01.540 You have here on this chart on the left the data for Switzerland, on the right for the 72 00:05:01.540 --> 00:05:02.540 US. 73 00:05:02.540 --> 00:05:05.540 The lower panel shows CPI inflation. 74 00:05:05.540 --> 00:05:11.940 And on the upper panel, you see in red the bank law as loans 75 00:05:11.940 --> 00:05:15.020 to GDP, so the leverage ratio of the economy. 76 00:05:15.020 --> 00:05:18.540 Then in the blue, it's the monetary aggregate M2 to GDP, 77 00:05:18.540 --> 00:05:21.080 and in gray, M3 to GDP. 78 00:05:21.080 --> 00:05:22.860 And what is very interesting to see 79 00:05:22.860 --> 00:05:26.180 a part of the huge increase in the leverage 80 00:05:26.180 --> 00:05:28.580 is the fact that until the 1980s, 81 00:05:28.580 --> 00:05:31.940 money and credit were highly collinear. 82 00:05:31.940 --> 00:05:37.180 But since the 1980s, 1918, 1985 in the US, 83 00:05:37.180 --> 00:05:40.380 monetary aggregates have expanded much slower 84 00:05:40.380 --> 00:05:42.980 than their credit counterparts. 85 00:05:42.980 --> 00:05:45.580 And I will try to convince you that these 86 00:05:45.580 --> 00:05:50.940 explain why inflation has been so low over the last decades. 87 00:05:50.940 --> 00:05:54.980 So in this paper, we discuss the relevance of the money 88 00:05:54.980 --> 00:05:57.780 view and the credit view as regards 89 00:05:57.780 --> 00:06:01.660 the way in which the expansion of the banking system 90 00:06:01.660 --> 00:06:05.300 is transmitted to aggregate demand and to inflation. 91 00:06:05.300 --> 00:06:08.740 And in particular, we emphasize the theoretical weaknesses 92 00:06:08.740 --> 00:06:13.020 of the credit view as we got the development of aggregate demand. 93 00:06:13.020 --> 00:06:15.540 And we derive the theoretical consequences 94 00:06:15.540 --> 00:06:18.180 of the decoupling of money and credit. 95 00:06:18.180 --> 00:06:19.860 And then from an empirical point of view, 96 00:06:19.860 --> 00:06:22.540 we exploit the decoupling of money and credit 97 00:06:22.540 --> 00:06:27.900 to provide empirical evidence in favor of the money view. 98 00:06:27.900 --> 00:06:30.900 So there are two views, two competing views, 99 00:06:30.900 --> 00:06:40.900 is one based on money, the other on credit, as regards the way in which the expansion of the banking system is transmitted to aggregate demand and to inflation. 100 00:06:40.900 --> 00:06:48.900 So according to the money view, it is the creation of money by the banking system that is responsible for stimulating aggregate demand. 101 00:06:48.900 --> 00:06:57.900 And the expansion of the banking system stimulates aggregate demand because the incremental spending that the banking system finances 102 00:06:57.900 --> 00:07:04.900 are not compensated by an equivalent reduction in spending because banks create the money that they lend. 103 00:07:04.900 --> 00:07:10.900 And then, when the borrowers spend the deposit that have been created by the banking system, 104 00:07:10.900 --> 00:07:17.900 these sets in motion a chain of transactions which stimulates aggregate demand as long as deposit circulates, 105 00:07:17.900 --> 00:07:21.900 that means as long as money circulates in the economy, 106 00:07:21.900 --> 00:07:27.900 and as long as the price level has not entirely adjusted to the new quantity of money. 107 00:07:29.900 --> 00:07:37.900 Now, the second view is the credit view, according to which it is the granting of credit by banks that stimulates aggregate demand 108 00:07:37.900 --> 00:07:46.900 because many economic agents cannot substitute non-monetary or non-banks credit or capital market credit for bank credits 109 00:07:46.900 --> 00:07:50.900 in an environment characterized by imperfect information. 110 00:07:50.900 --> 00:08:00.900 So, because banks have a monitoring advantage, bank loans are special in the sense that there is no close substitute for bank loans on capital markets. 111 00:08:00.900 --> 00:08:12.900 So, for example, if there is a reduction in bank credit, this may lead to a decrease in aggregate demand because many economic agents, like as small enterprises or households, 112 00:08:12.900 --> 00:08:21.900 Now, which view best describe the transmission mechanism of the expansion of the banking system on aggregate demand and inflation? 113 00:08:21.900 --> 00:08:32.900 So, at first glance, both view seems plausible. However, it is important to stress two related weaknesses of the credit view as regard to the development or the determination of aggregate demand. 114 00:08:32.900 --> 00:08:37.540 At first glance, both views seem plausible. However, it is important to stress two related 115 00:08:37.540 --> 00:08:42.220 weaknesses of the credit view as regard to the development or the determination of aggregate 116 00:08:42.220 --> 00:08:48.940 demand. First, the credit view completely overlooks the very specificity of bank credit, 117 00:08:48.940 --> 00:08:54.380 namely the fact that banks create the mean of exchange when they grant credits. To illustrate 118 00:08:54.380 --> 00:08:59.020 the fact that exponent of credit view completely overlooks that, we can quote Blinder and Stiglitz 119 00:08:59.020 --> 00:09:08.020 They write, if information were perfect or cheaply acquired, then a reduction in bank credit would be offset by an increase in non-bank credit. 120 00:09:08.020 --> 00:09:15.020 Central bank policy would change the locus of borrowing but would change neither the total volume of credit nor who gets it. 121 00:09:15.020 --> 00:09:28.020 Though this statement is clearly wrong because it is equivalent to claiming that the quantity of credit granted in the fractional reserve system would be the same as the quantity of credit granted in the 100% reserve requirement system 122 00:09:28.020 --> 00:09:32.740 Because non-banks cannot create money exactly as banks would not be allowed to create money 123 00:09:32.740 --> 00:09:35.780 in the 100% reserve requirement system. 124 00:09:35.780 --> 00:09:41.260 So this observation does not deny the monitoring advantage of banks, but it just shows that 125 00:09:41.260 --> 00:09:48.420 this credit view does not or completely ignores the very specificity of bank credit. 126 00:09:48.420 --> 00:09:53.500 Then the second related weakness comes from the fact that one unit of credit reflect the 127 00:09:53.500 --> 00:09:58.340 is the occurrence of one transaction, which occur once credit is granted. 128 00:09:58.940 --> 00:10:04.340 By contrast, one unit of money may reflect many transactions because money circulates. 129 00:10:04.620 --> 00:10:07.540 So the fact that money circulates and may finance many transactions 130 00:10:07.740 --> 00:10:11.460 suggests that the quantity of money must be a much better indicator 131 00:10:11.660 --> 00:10:16.060 or much more effective at influencing the aggregate demand and inflation 132 00:10:16.260 --> 00:10:18.180 than the quantity of credit. 133 00:10:18.380 --> 00:10:22.020 To put it in another sense, it is the increase in credit 134 00:10:22.020 --> 00:10:27.100 which reflects the occurrence of transactions but it is the stock of money times its velocity 135 00:10:27.100 --> 00:10:33.380 of circulations which reflects the quantity of potential transaction in the economy. 136 00:10:33.380 --> 00:10:39.180 So now how can we understand the decoupling of monetary and credit aggregates? 137 00:10:39.180 --> 00:10:43.880 So when banks grant credits they create at the same time deposits. 138 00:10:43.880 --> 00:10:54.440 Now, the decoupling reflects the substitution of non-monetary banks' papers, 139 00:10:54.440 --> 00:10:58.400 non-monetary liabilities for bank deposits. 140 00:10:58.400 --> 00:11:01.040 To borrow an expression from central bankings, 141 00:11:01.040 --> 00:11:04.520 when commercial banks issue non-monetary papers, 142 00:11:04.520 --> 00:11:09.520 they sterilise the quantity of deposits in circulation of the economy. 143 00:11:09.520 --> 00:11:14.600 And non-monetary papers are papers on the liability side of banks' balance sheets, 144 00:11:14.600 --> 00:11:17.280 but which are not used as common medium of exchange. 145 00:11:17.280 --> 00:11:23.440 That are money market papers, certificate of deposits, structure notes, and bonds, and so on. 146 00:11:23.440 --> 00:11:31.000 So the decoupling reflects the substitution of non-monetary papers for money. 147 00:11:31.000 --> 00:11:38.080 And these reflect also the willingness of deposit holder not to spend further their deposits, 148 00:11:38.080 --> 00:11:42.400 but to save the deposits that have been created by the banking system. 149 00:11:42.400 --> 00:11:46.800 We can illustrate this simple mechanism with standardized balance sheet. 150 00:11:46.800 --> 00:11:53.560 You can in a deposit-based banking system, you may expect deposit and credit to evolve in the same proportion. 151 00:11:53.560 --> 00:12:00.280 For example, the banking system pledged a paper issue by the household at the central bank against a cash payment 152 00:12:00.280 --> 00:12:04.360 and then the banking system create money and loans and deposits. 153 00:12:04.360 --> 00:12:08.680 So in the first case, loans are just funded by money, which can circulate. 154 00:12:08.680 --> 00:12:13.320 Then if banks start to issue non-monetary papers, 155 00:12:13.320 --> 00:12:16.600 they just sell these non-monetary papers against deposits, 156 00:12:16.600 --> 00:12:20.760 and this leads to a situation where loans are funded not by money, 157 00:12:20.760 --> 00:12:25.160 but by non-monetary papers like long-term debt. 158 00:12:25.160 --> 00:12:28.760 What are the implications for inflation of these mechanisms? 159 00:12:28.760 --> 00:12:32.280 So the substitution of non-monetary papers for deposits 160 00:12:32.280 --> 00:12:39.480 reflect the interruption of the chain of transactions initiated with the spending of created deposits. 161 00:12:39.480 --> 00:12:44.160 So when borrowers spend the deposit created by the banking system, 162 00:12:44.160 --> 00:12:47.040 these set in motion of chain of transactions. 163 00:12:47.040 --> 00:12:52.200 Now when deposit holders substitute non-monetary papers for their deposits, 164 00:12:52.200 --> 00:12:56.080 these reflect their willingness not to spend their deposit further 165 00:12:56.080 --> 00:12:59.760 and these reflect an interruption of the chain of transaction. 166 00:12:59.760 --> 00:13:12.760 So, according to the credit view, these transformations should have no impact on the development of aggregate demand and inflation because it is the granting of credit by banks which is supposed to stimulate aggregate demand. 167 00:13:12.760 --> 00:13:22.760 By contrast, according to the money view, the decoupling should exert a dampening effect on inflation because these reflect an interruption of the chain of transaction. 168 00:13:22.760 --> 00:13:25.520 The increasing use of non-monetary papers 169 00:13:25.520 --> 00:13:30.560 also facilitates the leverage of the economy 170 00:13:30.560 --> 00:13:34.560 because by substituting non-monetary papers 171 00:13:34.560 --> 00:13:38.840 for deposits, it relaxes the minimum reserve 172 00:13:38.840 --> 00:13:40.680 requirement of banks. 173 00:13:40.680 --> 00:13:42.640 So if there is less deposit in the economy, 174 00:13:42.640 --> 00:13:44.560 banks can expand their balance sheet. 175 00:13:44.560 --> 00:13:47.440 And also, if you introduce in this game 176 00:13:47.440 --> 00:13:49.920 some non-banks, financial intermediaries, 177 00:13:49.920 --> 00:13:52.200 which would issue non-monetary papers 178 00:13:52.200 --> 00:13:55.840 and then by packages of loans of the banks, 179 00:13:55.840 --> 00:13:58.480 this would unload the balance sheet of banks 180 00:13:58.480 --> 00:14:01.640 and relaxes the capital requirement of banks. 181 00:14:01.640 --> 00:14:04.200 So these may also not only have an impact 182 00:14:04.200 --> 00:14:05.480 on the development of inflation, 183 00:14:05.480 --> 00:14:09.440 but also it facilitates the leveraging of the economy. 184 00:14:10.720 --> 00:14:14.080 Now I turn to the quickly empirical part of the paper. 185 00:14:14.080 --> 00:14:16.760 So empirical analysis were relatively difficult 186 00:14:16.760 --> 00:14:18.280 to perform in the previous decades 187 00:14:18.280 --> 00:14:22.520 because money and credit evolved hand in hand in the past. 188 00:14:22.520 --> 00:14:24.360 So, for example, blind and stiglitz said, 189 00:14:24.360 --> 00:14:26.080 while we have two competing theories, 190 00:14:26.080 --> 00:14:28.080 one based on credit, the other on money, 191 00:14:28.080 --> 00:14:30.000 that are conceptually distinct, 192 00:14:30.000 --> 00:14:32.260 the data will have difficulty distinguishing them 193 00:14:32.260 --> 00:14:34.540 between them because credit and money 194 00:14:34.540 --> 00:14:36.400 normally are highly collinear. 195 00:14:36.400 --> 00:14:38.880 Now, we ask collinearity between money and credit 196 00:14:38.880 --> 00:14:40.880 where the fact when blind or stiglitz 197 00:14:40.880 --> 00:14:44.860 or Benjamin Friedman wrote their paper in the 80s, 198 00:14:44.860 --> 00:14:47.960 the decoupling we do have now since 1980s 199 00:14:47.960 --> 00:14:51.760 allows to test these hypotheses clearly. 200 00:14:51.760 --> 00:14:56.960 So the long-term relationship between money and inflation 201 00:14:56.960 --> 00:15:00.600 was first highlighted by Milton Friedman in the 60s. 202 00:15:00.600 --> 00:15:02.840 Then more recently, authors pretended 203 00:15:02.840 --> 00:15:05.840 that this relationship completely disappeared. 204 00:15:05.840 --> 00:15:08.560 However, I don't want to go too much into details, 205 00:15:08.560 --> 00:15:11.600 but it is possible if you adjust the quantity of money 206 00:15:11.600 --> 00:15:15.800 in the right way, if you in fact adjust the quantity of money 207 00:15:15.800 --> 00:15:23.480 by the growth rate of potential GDP and by the changes in the opportunity cost of money-holding, 208 00:15:23.480 --> 00:15:29.640 it is possible to find a long-term, still today, a long-term relationship between money and credit. 209 00:15:29.640 --> 00:15:36.600 So I don't have time to go too much into details, but if you just apply this simple adjustment to the money quantities, 210 00:15:36.600 --> 00:15:44.400 you find a very strong relationship between the CPI level and the quantity of prices. 211 00:15:44.400 --> 00:15:50.200 So here in this chart again you have data for Switzerland on the left, data for the U.S. on the right. 212 00:15:50.200 --> 00:16:00.160 The thin blue line is first the log of U.S. loans, then the dotted red line is a log of U.S. M2 aggregates, 213 00:16:00.160 --> 00:16:09.240 and then once you adjust you have the decline blue for credit and red for M2 adjusters. 214 00:16:09.240 --> 00:16:16.080 And there is a long-term relationship between the CPI level and the quantity of M2 adjusted 215 00:16:16.080 --> 00:16:19.480 according to the formulas I just show you here. 216 00:16:19.480 --> 00:16:25.560 So this clearly shows that it is not the quantity of credit that drives the aggregate demand 217 00:16:25.560 --> 00:16:29.720 and inflation in the economy, but it is the quantity of money. 218 00:16:29.720 --> 00:16:34.960 And we can also perform some different tests to show the long-term relationship. 219 00:16:34.960 --> 00:16:41.360 Now, what are the implications for monetary policy of these facts? 220 00:16:41.360 --> 00:16:44.240 So in this paper, we show that the expansion 221 00:16:44.240 --> 00:16:47.120 of the fractional reserve banking system 222 00:16:47.120 --> 00:16:52.320 does not necessarily lead to CPI inflation. 223 00:16:52.320 --> 00:16:54.880 So as I highlighted in my presentation, 224 00:16:54.880 --> 00:16:57.280 the decoupling of monetary and credit aggregate 225 00:16:57.280 --> 00:17:01.400 since the 1980s reflects an interruption 226 00:17:01.400 --> 00:17:04.080 of the chain of transaction initiated 227 00:17:04.080 --> 00:17:07.320 with the spending created by deposits. 228 00:17:07.320 --> 00:17:11.120 So now, since central banks orchestrate the development 229 00:17:11.120 --> 00:17:15.040 of the banking system, which objective should then 230 00:17:15.040 --> 00:17:17.800 central banks target? 231 00:17:17.800 --> 00:17:22.480 So as long as money and credit evolve hand in hand, 232 00:17:22.480 --> 00:17:26.160 monetary or inflation targeting implicitly 233 00:17:26.160 --> 00:17:29.560 prevents an excessive expansion of credit. 234 00:17:29.560 --> 00:17:31.480 Because if you target inflation, you also 235 00:17:31.480 --> 00:17:33.040 target monetary aggregate. 236 00:17:33.040 --> 00:17:39.880 And if credit expands in the same path as credit, you also prevent an expansion of credit. 237 00:17:39.880 --> 00:17:45.480 Nevertheless, the expansion or the decoupling of monetary and credit aggregates challenges 238 00:17:45.480 --> 00:17:52.200 the paradigm of price level stability because the focus on inflation may make policymakers 239 00:17:52.200 --> 00:17:57.040 overlook an excessive expansion of credit. 240 00:17:57.040 --> 00:18:04.560 And the intrinsic instability of credit source boom, for which the current crisis gives a 241 00:18:04.560 --> 00:18:10.080 prime illustration, was first theoretically exposed by Ludwig von Mises and then there 242 00:18:10.080 --> 00:18:19.000 was also, there after an extensive literature showing that credit, expansion of credit usually 243 00:18:19.000 --> 00:18:23.880 always precede big economic troubles. 244 00:18:23.880 --> 00:18:28.840 So there are strong presumptions that the paradigm of price-level stability is mainly 245 00:18:28.840 --> 00:18:36.960 responsible for the blow-up of financial and economic instability over the last 30 years. 246 00:18:36.960 --> 00:18:43.160 And to conclude, I would like to draw a parallel between the current situation and the critique 247 00:18:43.160 --> 00:18:46.920 of the currency school made by Ludwig von Mises. 248 00:18:46.920 --> 00:18:53.040 So whereas the currency school overlooked that the expansion of credit can result not 249 00:18:53.040 --> 00:18:58.680 Not only from the issue of bank notes, but also from the issue of bank deposits, the 250 00:18:58.680 --> 00:19:05.280 monetary school or the exponent of inflation targeting overlook that the expansion of credit 251 00:19:05.280 --> 00:19:12.200 can result not only from the issue of bank deposits, but also from the issue of non-monetary, 252 00:19:12.200 --> 00:19:14.840 non-inflationary papers. 253 00:19:14.840 --> 00:19:16.040 So thank you very much.