An increase in the amount of excess reserves that banks keep decreases the value of the real-world deposit multiplier.
The fundamental mechanism for producing money supply is the deposit multiplier, also referred to as the deposit expansion multiplier and controlled by the fractional reserve banking system.
As they lend out their reserves, banks produce what is known as checkable deposits. The amount of these newly made deposits depends on the bank's reserve requirement ratio and the amount of money that is available for loans.
The ratio of the checkable deposit amount to the reserve amount is thus known as the deposit multiplier. The reserve requirement ratio's opposite is the deposit multiplier.
A deposit multiplier reduces the chance that a bank won't have enough cash on hand to meet regular customer withdrawal requests. The amount of money it must have also depends on its reserve requirement ratio.
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