The money supply is a measure of the total amount of monetary assets within an economy at any given time. The withdrawal of money from Demand Deposit Account does not change the aggregate money supply as the amount withdrawn remains in circulation. The only factor that changes is that the status of money has changed from ‘Demand Deposits with the Banking System’ to ‘Currency with the Public’. Thus the aggregate Money Supply will remain unchanged.
Impact of demand deposit withdrawal on aggregate money supply
