How does this central bank money printing work?
‘Printing Money’ is a legacy term from the pre-digital era. These days, there is no printing involved. Central banks release money from their cash reserves digitally.
What the Reserve Bank of Australia is doing, for the first time ever, is temporarily increasing the amount of money in circulation to prevent the Australian economy from collapsing under the weight of the Government’s Covid-19 economic stimulus package.
It’s doing this by using its cash reserve to buy treasury bonds (Government debt) on the secondary market…