Current location - Education and Training Encyclopedia - Graduation thesis - I would like to ask, is the impact of the central bank's increase in the deposit reserve ratio on the base currency increasing or decreasing? Why?
I would like to ask, is the impact of the central bank's increase in the deposit reserve ratio on the base currency increasing or decreasing? Why?
Raising the deposit reserve ratio by the central bank will not affect the base currency.

Because the base money MB=C+R is essentially a debt that the central bank can't cash, in layman's terms, the base money is how much money the central bank printed, and the reserve ratio is only the adjustment of the ratio of money to reserves (that is, C and R) by the central bank, that is, how much money the central bank recovered, and it will not affect the total amount of MB (base money).

The base currency is the basis for the entire commercial banking system to create deposit currency, and it is the source of the multiple expansion of deposits in the entire commercial banking system.

Extended data:

The base currency has the following four important attributes:

1, controllability: the base currency is the currency that the central bank can regulate;

2. Liabilities: The base currency is the liabilities of the central bank;

3. Expansibility: the base currency can be absorbed by the central bank, as the basis for creating deposit currency, with multiple creation functions;

4. Uniqueness of initial source: that is, its increment can only come from the central bank.

References:

Baidu Encyclopedia-Base Currency