This paper has aimed to examine three important things: i) to identify the determinants ofrnmoney supply in Ethiopia over the period 1964/65QI-2003/04Q4, ii) to review the stability ofrnthe money-multiplier so as to respond to the question of whether money supply can berncontrolled and be correctly predicted using the money multiplier approach. And iii) to see therneffectiveness of monetary policy after the reform period of 1992 with regards to given targets.rnBased on these objectives, the study used the money-multiplier approach of money supplyrndetermination and found that money supply is related significantly with base money through thernmoney-multiplier. However, the money-multiplier is found unstable and moved inversely withrnthe movements of base money indicating that the control of money supply and correctlyrnpredicting its changes is questionable. Also from actual versus target comparison, the target forrndomestic credit to the government was not able to be achieved although money supply and totalrndomestic credit were near their respective targets suggesting that monetary policy wasn't ablernto achieve its objectives effectively. After identifying the inappropriateness of the money multiplierrnmodel of money supply determination, the paper used the disaggregated counter partsrnapproach of money supply determination and found that money supply is determined byrnnominal income, price level, foreign exchange receipts, lending interest rate, nominal exchangernrate and overall domestic credit expansion. Moreover, money supply is found to be influencedrnby seasonal fluctuations and political instabilities. This indicates that factors such as foreignrnexchange receipts might limit the control monetary authorities have over money supply.rnEspecially, the nonexistence of a well developed secondary market and the non-monetization ofrnthe economy might impose serious constraints on the implementation of monetary policy inrnEthiopia.rnKey words: Money supply, Money-Multiplier, Asset Counterparts, Stability, Ethiopia