Banks, Intermediation and the Endogenous Nature of Money Supply. A Note on the Contributions of Erich Schneider and Augusto Graziani

In the first part of the last century, the issue of the nature of money and the role of the banking system was at the centre of theoretical debate. Emblematic in Italy was the contribution of Amedeo Gambino who proposed a neoclassical interpretation of credit creation and put forward criticism of Keynesian theory. Then, this debate was enriched by the influences of Keynes’ and Schumpeter’s monetary theories. In this perspective, the position of the German economist Erich Schneider is important. The two economists did not go unnoticed by Augusto Graziani, although the latter ended up accepting the German economist’s positions. The purpose of this paper is twofold. On the one hand, it aims to explain the process that led Graziani to share and value Schneider’s approach. On the other hand, it shows the macroeconomic implications that Graziani identified in the recognition of the credit character of money, thus taking a different stance from Schneider on the monetary theories of Keynes and Schumpeter. The paper thus aims to provide two useful elements for understanding the maturing process of Graziani’s thinking on monetary issues.