Modern Money Mechanics

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"Modern Money Mechanics" was a booklet published and distributed by the Federal Reserve Bank of Chicago, originally written by Dorothy M. Nichols in May 1961. Described as a "workbook on bank reserves and deposit expansion", the text offers a detailed description of the basic process of money creation in a fractional reserve banking system. The approach taken illustrates the changes in bank balance sheets that occur when deposits in banks change as a result of monetary action by the Federal Reserve System.

The booklet is now out of print.

Revision history


  • May 1968
  • September 1971
  • June 1975
  • October 1982
  • June 1992 (revision prepared by Anne Marie L. Gonczy)
  • February 1994

See also