Money multiplier
![The expansion of $100 through fractional-reserve lending at varying rates, under the re-lending model. Each curve approaches a limit. This limit is the value that the money multiplier calculates.](/Images/godic/202501/28/Fractional_reserve_lending_varyingrates_100base0157.jpg")
In monetary economics, a money multiplier is one of various closely related ratios of commercial bank money to central bank money under a fractional-reserve banking system. Most often, it measures the maximum amount of commercial bank money that can be created by a given unit of central bank money. That is, in a fractional-reserve banking system, the total amount of loans that commercial banks are allowed to extend (the commercial bank money that they can legally create) is a multiple of reserves; this multiple is the reciprocal of the reserve ratio, and it is an economic multiplier.