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December 1980

Revision of the St. Louis Federal Reserve's Adjusted Monetary Base

The adjusted monetary base is designed to be a single measure of all Federal Reserve actions that influence the money stock, including effects of changes in reserve requirements. It is equal to the source base plus a reserve adjustment magnitude (RAM) that accounts for changes in reserve requirements by the Federal Reserve. The adjusted monetary base calculated by the Federal Reserve Bank of St. Louis is being revised as a result of changes in the structure of reserve requirements under the Monetary Control Act of 1980, which became effective in November 1980. This article explains the reasons for the revision and describes the process used to calculate the RAM.