Money Multiplierm
मुद्रा गुणक
Also called Broad Money Multiplier, Credit Multiplier
Formula
Money multiplier (m) = Money supply (M1 or M2) / Reserve money; equivalently m = (1 + c) / (c + r)
- Numerator
- Money supply (narrow M1 or broad M2)
- Denominator
- Reserve money (high-powered money)
The ratio of the money supply to reserve money, showing how many rupees of money the banking system creates from each rupee of high-powered money.
What the value tells you
A higher multiplier means each rupee of reserve money supports more deposits and credit; a falling multiplier signals more cash holding, higher reserves or weak lending.
Explained
Banks keep only a fraction of deposits as reserves and lend the rest. The loans are spent and redeposited, and the cycle repeats, so total deposits become a multiple of the original reserves.
Simple model: if banks keep a reserve ratio r and the public holds no cash, m = 1 / r.
With currency held by the public: let c = currency/deposit ratio and r = reserve/deposit ratio. Then m = (1 + c) / (c + r)
What lowers the multiplier:
- a higher CRR or banks holding excess reserves (higher r),
- people holding more cash relative to deposits (higher c),
- weak credit demand.
What raises it: lower reserve requirements, more use of digital payments and bank deposits, strong credit demand.
The multiplier links NRB's control over reserve money to broad money, and it is why CRR changes are a powerful tool.
Example
If c = 0.2 and r = 0.1, m = (1 + 0.2) / (0.2 + 0.1) = 4. Reserve money of Rs 100 billion would support broad money of about Rs 400 billion.
मुद्राप्रदाय र सञ्चित मुद्राबीचको अनुपात, जसले उच्चशक्ति मुद्राको प्रत्येक रुपैयाँबाट बैंकिङ प्रणालीले कति रुपैयाँ मुद्रा सिर्जना गर्छ भन्ने देखाउँछ।
अनुपातले के देखाउँछ
गुणक बढी हुनु भनेको सञ्चित मुद्राको प्रत्येक रुपैयाँले बढी निक्षेप र कर्जा धान्नु हो; घट्दो गुणकले बढी नगद राख्ने प्रवृत्ति, बढी मौज्दात वा कमजोर कर्जा देखाउँछ।
व्याख्या
बैंकले निक्षेपको केही अंश मात्र मौज्दात राखी बाँकी कर्जा दिन्छ। कर्जा खर्च भई फेरि निक्षेपमा आउँछ र चक्र दोहोरिन्छ, त्यसैले कुल निक्षेप सुरुको मौज्दातको धेरै गुणा हुन्छ।
सरल मोडल: बैंकले मौज्दात अनुपात r राख्ने र जनताले नगद नराख्ने भए m = १ / r।
जनताको नगदसहित: c = नगद/निक्षेप अनुपात र r = मौज्दात/निक्षेप अनुपात भए m = (१ + c) / (c + r)
गुणक घटाउने कुरा:
- बढी अनिवार्य नगद मौज्दात वा बैंकले अधिक मौज्दात राख्नु (r बढी),
- निक्षेपको तुलनामा जनताले धेरै नगद राख्नु (c बढी),
- कमजोर कर्जा माग।
गुणक बढाउने कुरा: कम मौज्दात आवश्यकता, डिजिटल भुक्तानी र बैंक निक्षेपको बढ्दो प्रयोग, बलियो कर्जा माग।
उदाहरण
c = ०.२ र r = ०.१ भए m = (१ + ०.२) / (०.२ + ०.१) = ४। रु १०० अर्ब सञ्चित मुद्राले करिब रु ४०० अर्ब विस्तृत मुद्रा धान्छ।
Related
Sources
- NRB Monetary Policy for 2025/26 (2082/83), EnglishNepal Rastra Bank
In the syllabus: NBL L6 2.6
Updated