What is High Powered Money?

High powered money refers to the money produced by RBI and government of India. It can also be defined as the total liability of monetary authority of the country and RBI.

It consists of –

-Currency in hands of public

-Cash reserve of commercial banks

-Other deposits with RBI

H = C + R

Where

H is high powered money

C is currency and

R is cash reserves with commercial banks

High powered money is also called monetary base