The Key Difference Between Monetary Base vs Money Supply

monetary base vs money supply
Feature	Monetary Base	Money Supply
Definition	The total amount of a currency in circulation plus reserves held by banks at the central bank.	The total amount of money available in the economy, including cash, checking deposits, and other liquid assets.
Also Known As	High-powered money or base money.	Broad money (includes M1, M2, M3 depending on classification).
Components	Currency in circulation + bank reserves (required & excess reserves).	Currency in circulation + demand deposits + savings accounts + other liquid assets.
Controlled By	Central bank directly controls the monetary base.	Money supply is influenced by central bank policies and banking system lending.
Impact	Forms the foundation for money creation through the banking system.	Reflects actual money available for spending and investment in the economy.
Measurement	Smaller in size compared to money supply.	Larger measure including multiple types of money.
Role in Economy	Used to control liquidity and inflation by central banks.	Indicator of economic activity and inflationary pressures.
Relation	Monetary base influences money supply through money multiplier effect.	Money supply results from monetary base multiplied by bank lending.
Examples	Cash held by public + reserves banks hold at the Fed/RBI.	Cash, checking accounts, savings accounts, money market funds.