Money Creation

Banks lend by creating money and governments do not spend taxes, contrary to popular belief. The UK Chancellor says that there is no such thing as a magic money tree. He is wrong, but alas far from alone. Money is created and destroyed many times every day. It is fundamental to how banks work. And the UK Government has its own magic money tree called the Bank of England - the UK Central bank. Owning a bank gives the government a unique place in the UK Economy. Put simply, unlike everyone else the government cannot run out of its own currency, the pound.