>>476534069Currency held in bank vaults may be counted as legal reserves as well as deposits
(reserve balances) at the Federal Reserve Banks. Both are equally acceptable in
satisfaction of reserve requirements. A
bank can always obtain reserve balances by
sending currency to its Reserve Bank and can obtain currency by drawing on its reserve
balance. Because either can be used to s
upport a much larger volume of deposit
liabilities of banks, currency in circulation and reserve balances together are often
referred to as "high-powered money" or
the "monetary base." Reserve balances and
vault cash in banks, however, are not counted
as part of the money stock held by the
public.