Which type of deposits constitutes part of the monetary base?

The monetary base, also known as the high-powered money, includes the total currency in circulation and the reserves held by the central bank. Among the options, commercial bank deposits with the Central Bank are considered part of the monetary base because they represent the reserves that banks hold at the central bank, which can be used to meet withdrawal demands and fulfill reserve requirements.

These deposits are crucial in the banking system as they form the foundation for bank lending and monetary policy. When the central bank adjusts the level of reserves in the banking system, it directly influences the amount of money that banks can create through loans, thereby impacting overall money supply and economic activity.

The other choices do not constitute part of the monetary base. Checking account deposits are a type of broad money but do not directly represent reserves held by banks at the central bank. Certificates of deposit are also liability instruments issued by banks, and while they are part of the money supply, they do not form part of the monetary base. Similarly, investment fund holdings represent financial assets and are not directly tied to the reserves that banks hold at the central bank. Thus, the only option that correctly identifies a component of the monetary base is the deposits that commercial banks keep with the Central Bank.