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July 1977

Revision of the Monetary Base

by Albert E. Burger and Robert H. Rasche

The monetary base, as published by the Federal Reserve Bank of St. Louis, consists of member bank deposits at Federal Reserve Banks, vault cash held by member and nonmember banks, and currency held by the public plus and an adjustment referred to as the reserve adjustment magnitude (RAM). On the basis of an analysis of the purpose for which RAM is to be used and its historical behavior, it was decided to change the method by which RAM is computed. Consequently, monetary base has been revised to reflect the new method of computing RAM.