Horizontalism is an approach to

money creation Money creation, or money issuance, is the process by which the money supply of a country, or of an economic or monetary region,Such as the Eurozone or ECCAS is increased. In most modern economies, money creation is controlled by the central bank ...

theory pioneered by

Basil Moore Basil John Moore was a Canadian post-Keynesian economist, best known for developing and promoting endogenous money theory, particularly the proposition that the money supply curve is ''horizontal,'' rather than upward sloping, a proposition known ...

which states that private

bank reserves Bank reserves are a commercial bank's cash holdings physically held by the bank, and deposits held in the bank's account with the central bank. Under the fractional-reserve banking system used in most countries, central banks typically set mini ...

are not managed by

central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a centra ...

s. Instead reserves will be provided on demand at the

bank rate Bank rate, also known as discount rate in American English, is the rate of interest which a central bank charges on its loans and advances to a commercial bank. The bank rate is known by a number of different terms depending on the country, and ...

set by the central bank. This inverts the mainstream textbook

money multiplier In monetary economics, a money multiplier is one of various closely related ratios of commercial bank money to central bank money (also called the monetary base) under a fractional-reserve banking system. It relates to the ''maximum'' amount of c ...

relationship between deposits and loans since loans are said to cause deposits which in turn cause reserves. Horizontalism influenced monetary circuit theorists to develop the

endogenous money Endogenous money is an economy’s supply of money that is determined endogenously—that is, as a result of the interactions of other economic variables, rather than exogenously (autonomously) by an external authority such as a central bank. T ...

approach that was already nascent within

post-Keynesian Post-Keynesian economics is a school of economic thought with its origins in '' The General Theory'' of John Maynard Keynes, with subsequent development influenced to a large degree by Michał Kalecki, Joan Robinson, Nicholas Kaldor, Sidney ...

academic thought. It states that an increasing demand for loans by bank customers leads to banks making more loans and creating more deposits, without regard to the size of the bank's available reserves. Thus credit money created by

private bank Private banks are banks owned by either the individual or a general Partner (business rank), partner(s) with limited partner(s). Private banks are not incorporation (business), incorporated. In any such case, creditors can look to both the "enti ...

s can be seen to be leveraging of those reserves without the guidance of a particular leverage ratio, i.e. horizontal leveraging.

Further reading