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November 1976

Derivation of the Monetary Base

by Anatol Balbach and Albert E. Burger

Although the monetary base has been a key concept in monetary analysis for two decades, its use has been primarily restricted to the monetary systems of industrial nations. Specifically, the base as constructed and measured in the United States has tended to be applied with some modifications to other economies. This article is an attempt to establish a general definition of a monetary base applicable to all relevant institutional structures and to provide guidelines for the identification and measurement of the base.