In general, the sum of currency in circulation plus demand deposits at the central bank, i.e. money created by the central bank. Central banks rightly attach great importance to this statistical measure, which is why it plays the primary role in their money supply management. – At the ECB, it is recorded in detail according to liquidity-providing and liquidity-absorbing factors – and, with regard to the net assets of the Eurosystem as a whole, also including holdings in gold plus foreign exchange – and published on a monthly basis. In this calculation, base money is the sum of the deposit facility, banknotes in circulation and banks’ balances on current accounts. – See base money, endogeneity principle, money creation, money supply, liquidity, M1, central bank money. – For the individual components of the monetary base calculated by the ECB, see the annex “Euro area statistics,” section “Monetary statistics,” subsection “Liquidity,” column “Base money” in the respective ECB Monthly Bulletin, ECB Monthly Bulletin of May 2012, pp. 21 ff (Relationship between the monetary base and price stability; overviews).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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