monetary base control

monetary base control

the control of the MONETARY BASE of the banking system as a means of regulating a nation's MONEY SUPPLY. If the COMMERCIAL BANKS adhere to a well-defined CASH RESERVE RATIO, then the monetary authorities, by controlling this narrow monetary base, can regulate monetary growth. See BANK-DEPOSIT CREATION, RESERVE-ASSET RATIO, MONEY SUPPLY DEFINITIONS, MONETARY POLICY.
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