Clearing secrets: Conto "NOSTRO", "VOSTRO"

Clearing secrets
Conto "NOSTRO", "VOSTRO" explained

The Bundesbank would create Deutsche marks to repay a dollar loan, and these marks would then be turned into dollars by the Fed. The Bundesbank and Fed in effect create on their respective books entries that simply offset each other but do not get settled. These new credits remain outstanding. The net result is an expansion in the quantity of marks and dollars. It's easy to "repay" loans when you can simply create money "out of thin air" in this way with bookkeeping entries.