money multiplier: CFA vs Schweser definition, different, required, between, correct

clearlycanadian

The definition of money multiplier is slightly different between CFA (p365, econ) and Schweser (p156, econ). The CFA definition uses desired reserve ratio, Schweser uses required reserve ratio. Which one is correct?
Thanks

LPoulin133

I think they should be the same. Desired from the point of view of the Fed. That reserve ratio is not optional; banks need to have a minimum of that.

dreampak

The required reserve ration is used in many countries monetary policies. However, in some countries like Australia, it is no longer used. The rationale is the introduction of Basel II which requires bank to properly manage risk as well as the effectiveness of applying monetary policies mainly through interest rate alone. Opponents of required reserve ratio also criticizes it as a tax on bank which caused dead weight loss.
D31dy was right, it depends on the point of view of each central bank. Some treat as compulsory some might not.