Money Multiplier Calculator

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The simple model assumes all money stays as deposits. The actual model adds excess reserves and currency drain, giving a smaller, more realistic multiplier.
The fraction of deposits banks must hold as reserves. Enter as a percentage, e.g. 10 for 10%. Many central banks have set this to 0, so you can use a small positive value to model voluntary or regulatory minimums.
%
The new deposit that starts the money-creation cycle. The calculator shows how this amount expands through successive rounds of lending.
USD
How many lending rounds to display in the deposit expansion table (3 to 20).
Money multiplierModerate expansion
10

Each dollar of reserves supports this many dollars of deposits

Total deposits created10,000USD
New money created9,000USD
Total reserves held1,000USD
New money created9,000
Total reserves1,000
Currency held by public0

Money multiplier: 10.0000

  • Each dollar held as reserves supports 10.00 dollars in deposits: a 10% reserve ratio means banks lend out 90.00 cents of every dollar received.
  • Starting from a $1,000.00 deposit, the banking system can ultimately hold $10,000.00 in total deposits.
  • The multiplier describes the upper bound under ideal conditions. In practice, weak loan demand or risk aversion can keep the actual multiplier well below this figure.

Next stepSwitch to the Actual model to see how excess reserves and currency drain shrink the real-world multiplier.

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