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Monetary
Base, Not Adjusted for Changes in Reserve Requirements
NABE
The Graph
of the Week shows the Monetary Base, Not Adjusted for Changes in Reserve
Requirements, from 1950 to the present. The source is FRED, the Federal Reserve
Economic Database, from the Research Department at the Federal Reserve Bank of
St. Louis.
http://www.nabe.com/graphweek/2009/gw090118.html
Definition of Monetary Base: In a modern industrialized monetary economy, the
monetary base is made up of:
1. The currency held by individuals and firms and
2. bank reserves kept within a bank or on deposit at the central bank.
Fox Video
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.
http://research.stlouisfed.org/fred2/series/BASE
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.
These definitions of the different types of money are typically classified as
levels of Ms, where the monetary base is the lowest M-level: M0.
"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 policy, but not without risk.
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