Monetary base

The monetary base refers to the total amount of cash available in a country's economy. The monetary base consists of public cash holdings and bank reserves.

Banks hold reserves to be able to pay back money to those who have saved money in the bank, the banks can not lend all the money that they get but must keep a certain proportion as reserves.

If banks borrow money from the central bank, this will increases the monetary base. The monetary base is less than the total quantity of money in the society.