مجلة دراسات الإنسان و المجتمع

The study aims to analyze the adequacy rates of foreign reserves and the extent of their accumulation effect on the money supply in the Libyan economy during the time period (1980_2018), by reviewing the theoretical framework. The study assumed that the adequacy rates of international reserves are at optimal levels and that there is no relationship between the money supply and these Reserves, data related to their adequacy rates were analyzed descriptively, and the (VAR) and Granger model of causation was used to analyze the relationship between the accumulation of foreign reserves and money supply, and the results finding, the (NFA / CI) ratio exceeded 100% in most years of study Consequently, it is above the optimum size level, as was the ratio (NFA / M2) above the optimal size level in most years too. In addition to the results of the estimated model indicate a causal relationship in one direction between foreign reserves (NFA) and money supply (M2), therefore the (VAR) model indicates that there is a relationship between them in the short term but it is weak, and the research recommends the need to take advantage of the accumulation International reserves in a way that leads to the diversification of local and external sources of income for the national economy, by investing part of them in the form of short-term external assets and the other in raising the local production capacity