Most banks are members of the Federal Reserve System. A goal of the Monetary Control Act of 1980 was to restrain competition in the financial and banking systems while a goal of the Banking Acts of the 1930s was to encourage competition in the financial and banking systems. Although changes in the discount rate are often discussed at FOMC meetings, formally, changes in the Fed s discount rate are proposed by district Fed banks subject to approval by the Board of Governors. The members of the Executive Board of the European Central Bank have the majority of votes on monetary policy decisions, similar to the members of the Board of Governors of the Federal Reserve. The primary cause of the decline in the money supply in the Great Depression was a decline in the monetary base.
T be the fractional reserve requirement ratio on time and savings deposits.
We note that D appears in every term on the left hand side of this relation, so we can simplify in the following way.