2 Money supply is that part of total stock of money in circulation, which is held by the public at any given point of time.

3 This money is in the form of coins, notes and balances held in current and savings accounts. Government issues one-rupee notes and all other coins, RBI issues paper currency and commercial banks create credit based on the demand deposits.

4 With the older `500 and `1,000 notes being scrapped, the money supply will reduce in the short run but is expected to pick up as the old notes get deposited with banks and the circulation of new currency notes increases.

5 If people choose not to declare and surrender their old currency notes, which are scrapped, that money will not re-enter the system and money supply will permanently reduce to that extent.