economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

, broad money is a measure of the amount of

money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money ar ...

, or

money supply In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circu ...

, in a national economy including both highly liquid "narrow money" and less liquid forms. The

European Central Bank The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important centra ...

, the

OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...

and the Bank of England all have their own different definitions of broad money.Definition of M0, M1, M2, M3, M4
, ''

Financial Times The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...

'' Lexicon

Definition

The

considers all monetary aggregates from M2 upwards to be part of broad money."Data on the broad monetary aggregate M2 in the US has been subject to several re-definitions" in Calza, Alessandro & João Sousa (2003)
Why has broad money demand been more stable in the Euro area than in other economies?
, ECB working paper no.261, September 2003, p. 13 n12 Typically, "broad money" refers to M2, M3, and/or M4. The term "narrow money" typically covers the most liquid forms of money, i.e. currency (

banknote A banknote—also called a bill (North American English), paper money, or simply a note—is a type of negotiable instrument, negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand. Banknotes w ...

s and

coin A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order ...

s) as well as bank-account balances that can immediately be converted into currency or used for cashless payments (overnight deposits, checking accounts, etc).M1 definition

Data It is typically denoted as M1. Narrow money is a

subset In mathematics, set ''A'' is a subset of a set ''B'' if all elements of ''A'' are also elements of ''B''; ''B'' is then a superset of ''A''. It is possible for ''A'' and ''B'' to be equal; if they are unequal, then ''A'' is a proper subset of ...

of broad money. Deposits in foreign currency are excluded from all monetary aggregates by most countries, or they are included only in broad money, with some exceptions.O’Brien, Yueh-Yun (2006)
Measurement of Monetary Aggregates Across Countries
, Division of Monetary Affairs,

Federal Reserve Board The Board of Governors of the Federal Reserve System, commonly known as the Federal Reserve Board, is the main governing body of the Federal Reserve System. It is charged with overseeing the Federal Reserve Banks and with helping implement the m ...

, Washington, D.C., 25 November 2006

defines "broad money" as: all banknotes and coins; bank deposits not considered long term, i.e. with an agreed maturity of up to 2 years; bank deposits redeemable at notice of up to 3 months, and similar repurchase agreements; money-market fund shares or units; and debt securities maturing within a period of up to 2 years. The typical OECD notation for "broad money" is M3.Broad money

Data Still, the exact definitions of monetary measures depend on the country. The terms will usually be more exactly defined before a discussion, whenever it is not sufficient to assume a wider definition. For the Bank of England, the "inescapable conclusion" is that "there can be no unique definition of 'broad money' and any choice of dividing line between those financial assets included in, and those excluded from, broad money is to a degree arbitrary, and is likely over time to be invalidated by developments in the financial system." Generally, "broad money" is more a term and less a fixed definition across all situations.McPhail, Kim (2010)
Broad Money: A Guide for Monetary Policy
"

Bank of Canada The Bank of Canada (BoC; french: Banque du Canada) is a Crown corporation and Canada's central bank. Chartered in 1934 under the ''Bank of Canada Act'', it is responsible for formulating Canada's monetary policy,OECD. OECD Economic Surveys: C ...

, October 2010 However defined in a specific country, the importance of monitoring the development of broad money has been recognized.Measures of broad money
, Bank of England ''Quarterly Bulletin'', 1986 Q2, pp. 212.219

References

External links

Broad Monetary Aggregates

Federal Reserve Bank of St. Louis The Federal Reserve Bank of St. Louis is one of 12 regional Reserve Banks that, along with the Board of Governors in Washington, D.C., make up the United States' central bank. Missouri is the only state to have two main Federal Reserve Banks (Ka ...

data, tracking broad money in various countries {{finance stub Monetary economics Banking