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That's how it has been for a while, as the bank of England paper explains.

The key is that the bank is "on the hook" for being able to get that money back eventually. So they don't just loan indiscriminately.




"On the hook" right up until the point they're about to go bust, then they hand over responsibility to the government to rescue them from their rampant speculation.


But “eventually” can mean “now, as an easy loan from the central bank/lender of last resort”, which trust the solvency of the bank’s loans.




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