High power money or Reserve money or base money is the central bank issued money that function as the monetary base of an economy and it mostly includes all of the currency (currency notes, coin and e₹) in circulation, in addition to bank’s deposits with the central bank. It depicts the stock of monetary liabilities in the central bank’s balance sheet.
High Power Money (Reserve Money or Base Money) – High power money is the base of money supply expansion in the economy.
High Power Money = C + OD + CR.
C = Currency with the public
OD = Other Deposits of the general public with the RBI (insignificant)
CR = Cash Reserves of banks which consists of (i.) Cash with banks themselves and (ii) Bankers deposits with RBI.