We can begin the fictional bank with the deposits or liabilities equal to ₹ 1,000. This could be because Ms. Sharon has deposited ₹ 1,000 in the bank. Let this bank deposit the same amount with Reserve Bank of India as reserves. The below-mentioned table represents its balance sheet :
|Reserves||₹ 1,000||Deposits||₹ 1,000|
|Net Worth||₹ 0|
|Total||₹ 1,000||Total||₹ 1,000|
If we presume that there is no currency in circulation, then the total money supply in the economy will be equal to ₹ 1,000.
M1 = Currency + Deposits = 0 +1,000 =1,000
The above mentioned is the concept that is explained in detail about the Balance Sheet of a Fictional Bank. To know more, stay tuned to BYJU’S.