Monetary Base

In economics, the monetary base (also base money, money base, high-powered money, reserve money, or, in the UK, narrow money) is a term relating to (but not being equivalent to) the money supply (or money stock), the amount of money in the economy. The monetary base is highly liquid money that consists of coins, paper money (both as bank vault cash and as currency circulating in the public), and commercial banks' reserves with the central bank. Measures of money are typically classified as levels of M, where the monetary base is smallest and lowest M-level: M0. Base money can be described as the most acceptable (or liquid) form of final payment. Broader measures of the money supply also include money that does not count as base money, such as demand deposits (included in M1), and other deposit accounts like the less liquid savings accounts (included in M2) etc.

(The narrow money supply is an earlier term used in the U.S to describe currency held by the non-bank public and demand deposits of banks, M1).

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Other articles related to "monetary base, monetary":

History of Monetary Policy - Trends in Central Banking
... The central bank influences interest rates by expanding or contracting the monetary base, which consists of currency in circulation and banks ... The primary way that the central bank can affect the monetary base is by open market operations or sales and purchases of second hand government debt, or by changing the reserve ... A central bank can only operate a truly independent monetary policy when the exchange rate is floating ...
Contractionary Monetary Policy - Policy Tools - Monetary Base
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... In 1993–1995 Turkmenistan increased monetary base by 20 - 28% monthly thus prices reacted by a monthly growth of 25 – 43%.The cash growth in circulation in 1993–1995 constituted 47.8% ... It is worth noting that the major factors accounting for the quality of monetary policy are rate of monetary base growth, rates of changes of velocity of ... Transition from a soft to a tougher monetary policy in the middle of 1996 immediately affected the dynamics of prices ...
Currency Intervention - Types - Sterilization - Sterilized Intervention
... the exchange rate without changing the monetary base ... Then the central bank “sterilizes” the effects on the monetary base by selling (buying) a corresponding quantity of domestic-currency-denominated bonds to soak ... of domestic currency without changing the monetary base, authorities purchase foreign-currency bonds, the same action as in the last section ...
Monetary Base - Management
... Open market operations" are monetary policy tools that affect directly the monetary base the monetary base can be expanded or contracted using an expansionary policy or a contractionary ... The monetary base is typically controlled by the institution in a country that controls monetary policy ... These institutions change the monetary base through open market transactions (i.e ...

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