1 Banks'role in the money supply ■ The money supply equals currency plus demand(checking account经常账户)deposits: M=C+D Since the money supply includes demand deposits,the banking system plays an important role. CHAPTER 18 Money Supply and Money Demand slide 3CHAPTER 18 Money Supply and Money Demand slide 3 Banks’ role in the money supply ▪ The money supply equals currency plus demand (checking account 经常账户) deposits: M = C + D ▪ Since the money supply includes demand deposits, the banking system plays an important role. 1