Updated: Oct 6
The current monetary system is based on a fractional reserve banking system, where banks issue loans and create money through the process of lending. Central banks, such as the Federal Reserve in the United States, regulate the supply of money in the economy through monetary policy, such as setting interest rates and controlling the money supply. This system is built on the concept of debt and interest, with individuals and businesses borrowing money from banks and paying interest on the loans. This creates a constant need for growth in the economy in order to pay off the accumulated debt. The current monetary system also relies on the stability and trust in government and the financial institutions that support it.