Is it OK? Central Bank = Commercial Bank WITHOUT mandatory fractional reserve

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fujisan
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Joined: Nov 5 2008
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Is it OK? Central Bank = Commercial Bank WITHOUT mandatory fractional reserve

Hi,

I'm currently translating the CC in French and localizing for European System of Central Banks (ESCB).

As far as I can understand, the ESCB & ECB operate almost like any other bank except they are NOT subject to ANY reserve requirement since they're guaranteed by their states.

So, when a Central Bank "purchases" a Treasury bond through its Open-Market Operations, it creates ALL the money "out of thin air" in exchange with the Treasury bond which is Govt' debt.

Is it correct?

Is it different from the US Fed?

How about the Bank of Canada, Swiss National Bank?

Reference: ECB, Open market operations, Chapter 3 of the General Documentation

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