Currency deposit ratio

 

                                               CURRENCY-DEPOSIT RATIO  

 

The currency deposit ratio shows the amount of currency that people hold as a proportion 

of aggregate deposits. An increase in cash deposit ratio leads to a decrease in money 

multiplier. An increase in deposit rates will induce depositors to deposit more, thereby 

leading to a decrease in Cash to Aggregate Deposit ratio. This will in turn lead to a rise in 

Money Multiplier