Final answer:
Supplementary deposits are a tool used by the Irish Central Bank to manage the money supply in the economy. When the central bank wants to reduce the money supply and tighten monetary policy, it can increase the reserve requirement of banks.
Step-by-step explanation:
Supplementary deposits are a tool used by the Irish Central Bank to manage the money supply in the economy. When the central bank wants to reduce the money supply and tighten monetary policy, it can increase the reserve requirement of banks. By increasing the reserve requirement, banks are required to hold a larger portion of their deposits as reserves with the central bank, reducing the amount of money available for lending. This helps to control inflation and reduce excessive borrowing.