Factors affecting the supply of cash

Central bank policies

TCB controls money supply through monetary policy tools like open market operations, reserve requirements, interest rates. Expansionary policies increase cash supply and contradictory policies decrease cash supply

Banking system

Health and stability of banking systems affect cash supply. Bank system can create more money through lending which increases cash supply

Government fiscal policy

Government spending and taxation policies can influence cash supply. Deficit spending increases cash supply while surplus budget reduces it

Foreign exchange reserves

Change in a country’s FER impact cash supply. Selling FER increase domestic money supply

What 4 factors affect the supply of cash

Central bank policies, banking system, government fiscal policy, foreign exchange reserves