Base money, also called M0 or central-bank money, consists of currency in circulation and reserve balances held by commercial banks at the central bank. It is the central bank's liability and the settlement asset of the payment system.

Base money is much smaller than broad money in modern economies. The relationship between the two is not a fixed multiplier; it depends on the central bank's operating framework, bank lending, and the demand for safe settlement balances.[1]

The Federal Reserve publishes the components of base money in its H.4.1 release.[2]

Sources

  1. Bank of England. Money in the modern economy: an introduction. Bank of England Quarterly Bulletin. 2014. View source Accessed Nov 11, 2026.
  2. Board of Governors of the Federal Reserve System. Factors Affecting Reserve Balances (H.4.1). Federal Reserve. 2026. View source Accessed Nov 11, 2026.