paper money and coins in the hands of consumers and businesses, as opposed to cash ( vault cash) held by financial institutions, or currency reserves of Federal Reserve Banks and the U.S. Treasury. Circulating currency is only a small fraction of the cash available for spending and it understates the money supply, which is largely demand deposits or checking accounts in banks and savings institutions.
Currency held by the public is one of the key factors affecting bank reserves. It is one of the statistical measures watched by the Federal Open Market Committee trading desk at the Federal Reserve Bank of New York when the Fed decides to add or drain reserves from the banking system to stay within monetary policy targets.
paper money and coins circulating in the economy, counted as part of the total money in circulation, which includes demand deposits in banks.
paper money and coins circulating in the economy, counted as part of the total money in circulation, which includes demand deposits in banks.
