economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...

, 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 are as ...

, 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 Circulation (curren ...

, 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 Big Four (banking)#Intern ...

, 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 e ...

and the

Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government of ...

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 A liquid is a nearly incompressible fluid that conforms to the shape of its container but retains a (nearly) constant volume independent of pressure. As such, it is one of the four fundamental states of matter (the others being solid, gas, a ...

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 t ...

s) as well as bank-account balances that can immediately be converted into currency or used for cashless payments (overnight

deposits A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, Transaction account#Current accounts, current accounts or any of several othe ...

checking account A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share draft account at credit unions, is a deposit account held at a bank or other financial institution. It is available to the ...

s, etc).M1 definition

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

subset In mathematics, Set (mathematics), set ''A'' is a subset of a set ''B'' if all Element (mathematics), 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 ...

of broad money. Deposits in

foreign currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general de ...

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 mon ...

Washington, D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...

, 25 November 2006

defines "broad money" as: all

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

and

coins 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 to ...

; bank

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 agreement A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is a form of short-term borrowing, mainly in government securities. The dealer sells the underlying security to investors and, by agreement between the two par ...

s; money-market fund shares or units; and

debt securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

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

, 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: Ca ...

, October 2010 However defined in a specific country, the importance of monitoring the development of broad money has been recognized.Measures of broad money
,

''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