A bank creates money using the deposits in the bank and with a required reserve ratio, they can loan more money than their deposit base. I was wondering, which deposit base are we talking about? Is it just high-powered money/bank reserves/notes or does it also include savings transferred from other banks (eg: someone shifts from one bank to another, thus bringing all their money along to the new bank electronically only), and other form of M4 money supply types?
The deposit base does not include any money transferred from another bank. Only the deposits it has taken in at its facilities.
