? In the formula, D is the total demand deposit, R is the original deposit, rd is the deposit reserve ratio, and re is the excess deposit reserve ratio. If there is still cash outflow in the deposit creation mechanism, that is, the loan is not completely converted into deposit, then the money creation multiplier is:
? At this time, only demand deposits are considered as money supply. If both demand deposits and money are regarded as money supply, that is, M=D+, and strong money H (bank reserve plus money held by non-bank departments) is introduced, the formula for creating money at this time is as follows:
? D is the total amount of derivative deposits, which comes from the original bank deposits, while Cu is outside the banking system, so it is not included in D. Cu is a high-energy currency because it is the same as the deposit reserve (statutory and excess). As long as it is deposited in the bank as the original deposit, the total amount of derivative deposit D can be increased. The m in the formula given by the landlord is actually what we generally call money supply M 1- money plus total deposits. The key here is to understand the high-energy currency H, H=Cu+Rd+Re. In fact, it is precisely because of these reserves that D becomes smaller.
? Imagine that if a deposit has no reserve, then D will tend to infinity. With statutory reserve and excess reserve, D will become smaller, and with cash leakage, D will become smaller further. On the one hand, the factors that affect the currency multiplier.
? The factors that affect the currency multiplier are cash leakage rate, demand deposits, statutory reserve ratio, excess reserve ratio and the proportion of time deposits to deposits.