For your unanswered "bootstrap" question, there are various possibilities, which I think I discussed elsewhere, but I'll put them here too.
1. The bank could sell something tangible (e.g. gold) to the central bank to obtain reserves to lend to the government.
2. The bank could borrow from the central bank using something tangible as collateral, and lend the new reserves to the government.
3. If the nation used a different type of money beforehand, it's almost certain that the central bank would exchange it for reserves. (The Fed would issue FRNs in exchange for red-seal US notes, which are liabilities of the Treasury).
4. It's possible that to bootstrap the system, legislators could allow the central bank to buy a limited quantity of bonds directly from the government as a one-off.
There are probably others I haven't thought of here, but all of these solve the problem.
As a side note, it seems that what the central bank accepts as collateral matters greatly, but is something I don't think I've ever seen mentioned in discussions of monetary policy.
For your unanswered "bootstrap" question, there are various possibilities, which I think I discussed elsewhere, but I'll put them here too.
1. The bank could sell something tangible (e.g. gold) to the central bank to obtain reserves to lend to the government.
2. The bank could borrow from the central bank using something tangible as collateral, and lend the new reserves to the government.
3. If the nation used a different type of money beforehand, it's almost certain that the central bank would exchange it for reserves. (The Fed would issue FRNs in exchange for red-seal US notes, which are liabilities of the Treasury).
4. It's possible that to bootstrap the system, legislators could allow the central bank to buy a limited quantity of bonds directly from the government as a one-off.
There are probably others I haven't thought of here, but all of these solve the problem.
Those make sense.
As a side note, it seems that what the central bank accepts as collateral matters greatly, but is something I don't think I've ever seen mentioned in discussions of monetary policy.
This is an excellent resource for anyone who wants an overview of the whole process in straightforward terms, and well-referenced. Very impressive.
Thank you