High-powered money consists of the sum of currency outstanding plus the reserves that the commercial banking system has in their vaults and on deposit in the central bank.

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High-powered money, also known as the monetary base, includes both the currency in circulation (notes and coins in the hands of the public) and the reserves that commercial banks hold in their vaults or deposit at the central bank. These reserves are used to meet their reserve requirements and for day-to-day banking operations.

High-Powered Money Consists of the Sum of Currency Outstanding Plus