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The factors that affect the money multiplier include the rediscount rate of the central bank
If the speed of money circulation is stable, then monetary policy can get any ideal income level by simply setting the total amount of moneyin reality, the speed of money circulation is unstable, and the relationship between the total economic income and the total amount of various currencies changes with time
the actual money supply, where 1 / 0.2 is the money multiplier, that is, 1 divided by the legal reserve ratio. There is a multiplier effect between the initial money supply of the central bank and the final formation of social money
extended data:
the cost of borrowing reserves is mainly the rediscount rate of the central bank. If the rediscount rate is high, it means that the cost of borrowing reserves is high, and commercial banks will keep more excess reserves for a rainy day; On the contrary, there is no need to keep more excess reserves
operational risk and asset liquidity. If the operational risk is high and the liquidity of the existing assets is poor, it is necessary for commercial banks to keep certain excess reserves to cope with various risks
Generally speaking, the larger the E value is, the smaller the monetary multiplier is; On the contrary, the smaller the E value is, the larger the money multiplier is. The size of the required reserve ratio (RD) for current deposits and the required reserve ratio (RT) for fixed deposits is directly determined by the central bank. If R D and R T are large, the money multiplier is small; On the contrary, if RD and RT are small, the monetary multiplier is largethese factors are (when the statutory reserve ratio is raised, banks need to hand over more deposits to the central bank, the loanable funds will be reced, and the base of monetary multiplier will be smaller, so the derivative effect in the process of lending will be smaller, and the derivative currency will be smaller. When the reserve ratio is lowered, the opposite is true.) The factors that affect the money multiplier. For reference.
(1) statutory reserve ratio. The statutory reserve ratio of time deposit and demand deposit is directly determined by the central bank. Generally, the higher the legal reserve ratio is, the smaller the monetary multiplier is; On the contrary, the greater the monetary multiplier< (2) excess reserve ratio. The ratio of the total amount of deposit to the reserve held by commercial banks in excess of the statutory reserve is called excess reserve ratio. Obviously, the existence of excess reserve reces the ability of banks to create derivative deposits. Therefore, the relationship between excess reserve ratio and monetary multiplier also changes in the opposite direction. The higher the excess reserve ratio is, the smaller the monetary multiplier is; On the contrary, the greater the money multiplier< (3) cash ratio. Cash ratio refers to the ratio of cash in circulation to current deposits of commercial banks. The cash ratio is positively related to the money demand. Therefore, all factors affecting money demand can affect the cash ratio. For example, if the interest rate of bank deposits decreases, the income of interest bearing assets decreases. People will rece their deposits in the bank and prefer to hold more cash, thus increasing the cash ratio. The higher the cash ratio is, the more cash flows out of the expansion process of deposit money and into the daily circulation, thus directly recing the amount of loanable funds of banks and restricting the derivative ability of deposits, the smaller the money multiplier is< (4) the ratio between time deposit and current deposit. As the derivative ability of time deposit is lower than that of current deposit, the central banks of all countries have different statutory reserve ratio for different types of commercial bank deposits. Generally, the statutory reserve ratio of time deposit is lower than that of current deposit. In this way, even if the legal reserve ratio remains unchanged, the change of the ratio between fixed deposit and current deposit will cause the change of the actual average legal reserve ratio, and ultimately affect the size of the monetary multiplier. Generally speaking, when other factors remain unchanged, the ratio of time deposit to current deposit increases, and the monetary multiplier will increase; On the contrary, the money multiplier will be smaller. In short, the size of money multiplier is mainly determined by the legal deposit reserve ratio, excess reserve ratio, cash ratio and the ratio between time deposit and current deposit. Besides the four factors mentioned above, there are also two special factors: fiscal deposit and credit plan management.