Principle of endogeny

In the context of money supply, this refers to the fact that the demand for money is determined by the economic process (endogenously). The level of demand is primarily determined by – the overall volume of economic activity, – the opportunity costs of holding money and – the corresponding expectations of economic agents. – Thus, the money supply is not exogenously determined by the central bank (as can also be read in some textbooks), but is merely controlled by the central bank. – See Credit Granting, Compensatory.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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