A closer look at banks’ business models from the International Monetary Fund promises an improvement to traditional macroeconomic models.

Published on August 22, Shalva Mkhatrishvili’s paper develops a novel model. He says that banks create money while “facing solvency, liquidity and maturity risks” and while being subject to “regulatory and demand constraints” – factors that are interlinked tightly and in a way that is non-linear.

Mkhatrishvili writes that his approach differs from existing