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Currency-to-deposit ratio

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If the currency-to-deposit ratio increases, what effect, if any, does this have on the monetary base, the money supply, total deposits, and economic growth?

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//Before lettering about the effect of currency-to-deposit ratio, we have to first be aware of the currency-to-deposit ratio and its various aspects that bring change. So, firstly, I will write about the concept of currency-to-deposit ratio. //

It is the amount of currency that people hold relative to their deposits. In currency-deposit ratio, currency is divided by deposits. The ratio shows the behavior and preference of public in an economy. If currency-deposit ratio increases, there is a decrease in money supply. Decrease in currency deposit ratio leads to increase in money supply.

//Above, we discussed about the currency-to-deposit ratio and now as per the directions, we will discuss if the currency-to-deposit ratio increases, what effect does this ...

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  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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