The amount of money to be created by commercial banks is actually influenced by the

The amount of money that can be created by commercial banks is influenced by the legal reserve ratio. This is a regulation set by the central bank that requires commercial banks to hold a certain percentage of their deposits as reserves. The reserves are held in the form of cash or deposits with the central bank. When a bank receives a deposit from a customer, it is required to hold a percentage of that deposit as reserves and can use the rest to make loans or invest in other assets. The amount of money that a bank can lend out is determined by the reserve ratio. For example, if the reserve ratio is 10%, a bank can lend out 90% of the deposit it received. The reserve ratio influences the amount of money that can be created by commercial banks because it limits the amount of money that banks can lend out. If the reserve ratio is high, banks can only lend out a small percentage of their deposits, and if the reserve ratio is low, banks can lend out more. Therefore, the reserve ratio plays a crucial role in determining the amount of money that can be created by commercial banks.