Money Multiplier Calculator
Estimate how much the banking system can expand the money supply from a single dollar of reserves using the money multiplier formula.
What the money multiplier measures
The money multiplier describes how much the total money supply can expand from an initial injection of reserves into the banking system, because banks lend out most of the deposits they receive and those loans become new deposits elsewhere.
The formula
The simple money multiplier is 1 ÷ required reserve ratio. For example, a 10% reserve requirement implies a theoretical multiplier of 10, meaning $1,000 in new reserves could support up to $10,000 in new deposits. The extended version, (1 + currency ratio) ÷ (reserve ratio + excess reserve ratio + currency ratio × (1 – reserve ratio + excess reserve ratio)), accounts for cash the public holds outside banks and reserves banks hold beyond the requirement, both of which reduce actual expansion.
In practice, actual money creation is usually well below the simple theoretical multiplier because banks hold excess reserves and the public holds cash. This calculator is for general economics education and planning, not a prediction of real-world bank lending.