Why does Monetary base considered as high powered money?

The monetary base, also known as high-powered money, consists of currency in circulation and reserves held by banks at the central bank. It is termed "high-powered" because it serves as the foundation for the money supply in the economy, allowing banks to create additional money through the process of fractional reserve banking. A change in the monetary base can lead to a multiplied effect on the total money supply, influencing interest rates and overall economic activity. Thus, it plays a critical role in monetary policy and economic stability.