The blind spot of endogenous money: global banking and the Eurodollar market

Abstract Global banks play a crucial role in the international monetary and financial system. However, they pose ongoing challenges for both mainstream and heterodox economists. This paper provides a critical examination of the global banking literature. As such, it shows how the interpretation put forward by economists at the BIS has evolved over time. It argues that in spite of its increasing sophistication, it remains anchored in the loanable funds approach. The paper also highlights a significant gap in the heterodox literature. It demonstrates that post-Keynesians have yet to develop a satisfactory alternative based on the theory of endogenous money. The paper concludes by drawing attention to the pressing need for such an alternative.