<p>The concept of a money multiplier is meaningless in an unregulated environment. The money multiplier is, by definition, a legal limit imposed on the reserves banks must have.</p>

CC BY-SA 3.0
2013-12-31T00:40:06.137Z
You are not right. The multiplier is ratio between monetary base and all money in economy. Even if no legal limit is imposed there certainly is some lending occuring so the multiplier value must exist.
Kozuch
CC BY-SA 3.0
2013-12-31T00:47:59.743Z
Correction: the ratio is of course the other way around.
Kozuch
CC BY-SA 3.0
2013-12-31T05:17:22.720Z
@Kozuch No, the ratio is between the maximum amount of money that can be in circulation and the monetary base. This presumes some limit to the amount that can be in circulation. See, for example, the [Wikipedia article you linked](https://en.wikipedia.org/wiki/Money_multiplier) which says, "As a formula and legal quantity, the money multiplier is not controversial – it is simply **the maximum that commercial banks are allowed to lend** out" and "The money multiplier, m, is the inverse of the **reserve requirement**, RR". (Emphasis added.)
David Schwartz
CC BY-SA 3.0
2013-12-31T09:24:52.853Z
Ok, it seems there are multiple definitions of money multiplier either as statistic of or maximum "commercial bank money/central bank money" ratio (see linked Wikipedia, section "Definition"). I rephrased the question to remove possible confusion - I want to measure the "statistic" (real) value, not a theoretical legally maximum.
Kozuch
CC BY-SA 3.0
2013-12-31T00:06:28.747Z
2013-12-31T00:06:28.747Z
David Schwartz
<p>Since <a href="https://en.bitcoin.it/wiki/Fractional_Reserve_Banking_and_Bitcoin" rel="nofollow"><strong>fractional reserve banking</strong></a> where money is created by lending is possible with Bitcoin is there a way it can be measured to give a total amount of money in the system? Such a measurement would actually reveal the value of <a href="https://en.wikipedia.org/wiki/Money_multiplier" rel="nofollow"><strong>money multiplier</strong></a> which I define as a real statistical ratio between <a href="https://en.wikipedia.org/wiki/Money#Commercial_bank_money" rel="nofollow">commercial banks money</a> and <a href="https://en.wikipedia.org/wiki/Monetary_base" rel="nofollow">monetary base</a> rather than a theoretical maximum ratio that is legally defined (because of lack of regulation with Bitcoin).</p>

<p>I guess such a measurement can either be direct (by lenders reporting how much they've lent) or indirect (measuring some other impacts those loans have on economy).</p>

<money-supply><fractional-reserve>
Measuring total amount of Bitcoin in circulation
Kozuch
# Measuring total amount of Bitcoin in circulation

(Asked by: username_0 on 2013-12-30)

Since [**fractional reserve banking**](https://en.bitcoin.it/wiki/Fractional_Reserve_Banking_and_Bitcoin) where money is created by lending is possible with Bitcoin is there a way it can be measured to give a total amount of money in the system? Such a measurement would actually reveal the value of [**money multiplier**](https://en.wikipedia.org/wiki/Money_multiplier) which I define as a real statistical ratio between [commercial banks money](https://en.wikipedia.org/wiki/Money#Commercial_bank_money) and [monetary base](https://en.wikipedia.org/wiki/Monetary_base) rather than a theoretical maximum ratio that is legally defined (because of lack of regulation with Bitcoin).

I guess such a measurement can either be direct (by lenders reporting how much they've lent) or indirect (measuring some other impacts those loans have on economy).

**Tags:** money-supply, fractional-reserve


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## 1 answers

### Answer by username_1 on 2013-12-31. Score: 1

The concept of a money multiplier is meaningless in an unregulated environment. The money multiplier is, by definition, a legal limit imposed on the reserves banks must have.

> **Comments:**
> **username_0**: You are not right. The multiplier is ratio between monetary base and all money in economy. Even if no legal limit is imposed there certainly is some lending occuring so the multiplier value must exist.  
> **username_0**: Correction: the ratio is of course the other way around.  
> **username_1**: @username_0 No, the ratio is between the maximum amount of money that can be in circulation and the monetary base. This presumes some limit to the amount that can be in circulation. See, for example, the [Wikipedia article you linked](https://en.wikipedia.org/wiki/Money_multiplier) which says, "As a formula and legal quantity, the money multiplier is not controversial – it is simply **the maximum that commercial banks are allowed to lend** out" and "The money multiplier, m, is the inverse of the **reserve requirement**, RR". (Emphasis added.)  
> **username_0**: Ok, it seems there are multiple definitions of money multiplier either as statistic of or maximum "commercial bank money/central bank money" ratio (see linked Wikipedia, section "Definition"). I rephrased the question to remove possible confusion - I want to measure the "statistic" (real) value, not a theoretical legally maximum.  

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