In order to increase the money supply, what must the banking system have?

Question

Quizplus · Accepted Answer

In order to increase the money supply, the banking system must have excess reserves. Excess reserves are the reserves held by a bank that are over and above the required reserves. By using these excess reserves, banks can lend out more money and increase the money supply. Desired reserves refer to the reserves calculated by the bank to meet the withdrawal demands of their customers. The authority to buy corporate stocks is not relevant to increasing the money supply, and printing currency is the responsibility of the central bank, not the banking system.

In Order to Increase the Money Supply, What Must the Banking