monetary base: Definition and Much More from Answers.com
- ️Wed Jul 01 2015
|
Results for monetary base |
The total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank's reserves. This measure of the money supply typically only includes the most liquid currencies.
Also known as the "money base".
Investopedia Says:
For example, suppose country Z has 600 million currency units circulating in the public and its central bank has 10 billion currency units in reserve as part of deposits from many commercial banks. In this case, the monetary base for country Z is 10.6 billion currency units.
For many countries, the government can maintain a measure of control over the monetary base by buying and selling government bonds in the open market.
Related Links:
They print money, they control inflation, and much, much more. All you need to know about central banks is here. What Are Central Banks?
It's a part of everyone's life, and we all want it, but do you know how it gains value and how it is created? What Is Money?
Sum of reserve accounts of financial institutions at Federal Reserve Banks, currency in circulation (currency held by the public and in the vaults of depository institutions). The major source of the adjusted monetary base is Federal Reserve Credit. The monetary base, as the ultimate source of the nation's Money Supply, is controllable, at least to some degree, by Federal Reserve Monetary Policy. The adjusted monetary base data is compiled weekly by the Federal Reserve Board and the Federal Reserve Bank of St. Louis, and is adjusted seasonally.
In economics, the monetary base, or the money base (often called narrow money in the UK) is a term relating to the volume of money in the economy, or money supply. The monetary base comprises only currency (banknotes and coins) and commercial banks' reserves with the central bank. As such, it is a narrow definition of money supply, consisting of only the most liquid forms of money. Wider definitions of the money supply include the public's bank deposits and are therefore larger in volume and encompass money of a lower liquidity.
Equation
Monetary Base = Non Borrowed Monetary Base + Discount Loans
Monetary Base (MB) * Money base money multiplier (m) = M1
Monetary Base = "High-powered money" = Currency (C) + Reserves (R) = Currency (C) + (Deposits (D) * Required Reserve Ratio (r))
(Contrast with M1, which is Currency + Deposits)
External links
This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)
Join the WikiAnswers Q&A; community. Post a question or answer questions about "monetary base" at WikiAnswers.