Base Money
Discover the key benefits and practical details of glossary.
Base Money
Discover the key benefits and practical details of glossary.
Base Money
Discover the key benefits and practical details of glossary.
Table of contents
Base money (also called central bank money or the monetary base) is the narrowest measure of money the central bank directly controls. It includes physical cash in circulation plus reserves that commercial banks hold at the ECB.
Base money is the foundation of the banking system, but most money in the economy is created when banks lend to customers.
Base money vs broad money
Base money is currency plus bank reserves. M3 money supply is much broader and includes deposits, money market funds, and other near-money assets. QE increases reserves; everyday spending still depends mainly on bank lending and deposits.
For personal finance, what matters is the balance in your Bank Account and how monetary policy influences interest rates on your savings and loans.
Table of contents
Base money (also called central bank money or the monetary base) is the narrowest measure of money the central bank directly controls. It includes physical cash in circulation plus reserves that commercial banks hold at the ECB.
Base money is the foundation of the banking system, but most money in the economy is created when banks lend to customers.
Base money vs broad money
Base money is currency plus bank reserves. M3 money supply is much broader and includes deposits, money market funds, and other near-money assets. QE increases reserves; everyday spending still depends mainly on bank lending and deposits.
For personal finance, what matters is the balance in your Bank Account and how monetary policy influences interest rates on your savings and loans.
Table of contents
Base money (also called central bank money or the monetary base) is the narrowest measure of money the central bank directly controls. It includes physical cash in circulation plus reserves that commercial banks hold at the ECB.
Base money is the foundation of the banking system, but most money in the economy is created when banks lend to customers.
Base money vs broad money
Base money is currency plus bank reserves. M3 money supply is much broader and includes deposits, money market funds, and other near-money assets. QE increases reserves; everyday spending still depends mainly on bank lending and deposits.
For personal finance, what matters is the balance in your Bank Account and how monetary policy influences interest rates on your savings and loans.