मुद्रा गुणक (Money Multiplier) भनेको केन्द्रीय बैंकले आपूर्ति गरेको आधार मुद्रा (High Powered Money / Reserve Money) को एक एकाइले बैंकिङ प्रणालीमार्फत कति गुणा बढी कुल मुद्रा आपूर्ति (Money Supply) सिर्जना गर्छ भन्ने मापन हो।
The money multiplier is expressed as the ratio of money supply to high-powered money.
i.e. Money Multiplier (m) = Ms/H
If we consider the arrow money supply (M1), we get the narrow money multiplier (m1) as
m1 = M1/H
or, m1 = Cash + Demand Deposit/Cash + Reserve
or, m1 = {C/DD + DD/DD}/{C/DD + R/DD}
∴ {C/DD + 1}/ {C/DD + R/DD} This is the narrow money multiplier.
It shows that the narrow money multiplier depends on two behavioral ratios, C/DD & R/DD. If the public starts to hold more cash relative to demand deposits, then C/DD increases, which reduces the circulation of money in the economy, and thus the value of the money multiplier and money supply both decline. It means there is an inverse relationship between the money multiplier and C/DD.
Similarly, if R/DD increases, it reduces the value of the money multiplier and money supply. If we consider the broad money supply, then we get the broad money multiplier as:
m2 = M2/H
or, m2 = {C + DD + TD}/C + R
or, m2 = {(C/DD) + (DD/DD) + (TD/DD)}/ {(C/DD) + (R/DD)} (dividing both numerators & denominators by DD)
∴ m2 = {C/DD + 1 + TD/DD}/ {(C/DD) + (R/DD)}
This is the broad money multiplier, which depends inversly with the C/DD and R/DD while the broad money multiplier depends positively on TD/DD. It means if the time deposit in the banking system increases relative to demand deposit, the banks can use the deposit for the long term, which increases its circulation and the value of the money multiplier.
Therefore, the money supply is positively related to the money multiplier, which depends on C/DD, R/DD, TD/DD. So, the money supply also depends on these ratios. However, these are the proximate determinants (कुनै परिणामलाई सिधै असर गर्ने मुख्य र नजिकका कारणहरू) of the money supply, whereas the ultimate determinants of the money supply are some other behavioral, institutional, and structural factors, such as the behavior of the general public, behavior of BFIs, nature and status of financial market development, seasonal factors, religious and cultural factors, expectation regarding the market and economy, financial innovation, technology and financial literacy.