Bangladesh’s money multiplier has reached a new peak of 5.47, reflecting an increased ability of the taka to generate more money within the economy. This metric, which measures the maximum amount of money that can be created from an initial deposit, climbed from 5.07 in June 2023 and 5.23 in May 2023.
With a money multiplier of 5.47, an injection of Tk 1,000 by the central bank could potentially expand the total money supply to Tk 5,470. The rise in the money multiplier is attributed to a decrease in the reserve deposit ratio and the currency deposit ratio. While a higher money multiplier can stimulate economic activity, it may also pose inflationary risks if the money supply growth outpaces economic growth. Conversely, a lower money multiplier can help control inflation.
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