Monetary base

This includes: The monetary base should not be confused with the money supply, which consists of the total currency circulating in the public plus certain types of non-bank deposits with commercial banks.

These institutions change the monetary base through open market operations: the buying and selling of government bonds.

Interest rates, especially on federal funds (ultra-short-term loans between banks), are themselves influenced by open market operations.

The quantity of reserves in the banking system is supported by the open market operations performed by the reserve banks, involving the purchase and sale of various financial instruments, commonly government debt (bonds), usually using "repos".

This adds another lever to the interest rate control mechanisms available to the reserve bank.

Euro monetary base
U.S. Monetary base
Base money of the Euro zone and money supplies M1, M2 and M3, and euro zone GDP from 1980–2021. Logarithmic scale.