Last modified on July 12, 2016, at 06:01

Money supply

Money supply is the amount of money (coins, paper currency, and checking accounts) that is in circulation in the economy.

Economists give a broader definition for the money supply or monetary aggregates:

  • The currency (bank notes and coins) in circulation plus personal chequing accounts and current accounts at banks, are referred to as M1.
  • A broader measure, M2, also includes personal savings accounts and other chequing accounts, term deposits, and non-personal deposits requiring notice before withdrawal.
  • Banks are not the only providers of deposit facilities, so an even broader measure of money is provided. M2+ includes all deposits at non-bank deposit-taking institutions, money-market mutual funds, and individual annuities at life insurance companies.
  • Finally the broadest measure is M2++, also includes all types of mutual funds and Treasury Bills.