Compute the simple textbook deposit multiplier from a reserve requirement.
| Multiplier | – |
Use this money-multiplier calculator for the classroom identity, not as a model of how modern banks actually create loans. It ignores excess reserves sitting idle and cash people hold outside banks.
Multiplier = 1 ÷ reserve ratio. Type 10 for a 10% reserve requirement, which gives 10. The ratio must be above zero.
Reserve ratio (%): Required reserves as a percent of deposits, e.g. 10 for 10%.
Multiplier: How many units of deposits one unit of reserves can theoretically support.
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