Money supply

Money supply or money stock is the total amount of money available in an economy at a particular point in time. Different metrics exists due to the different definitions of money.

True Money Supply
Austrian economists Murray Rothbard, Joseph Salerno, Frank Shostak, and John Shedlock have developed alternative monetary aggregates, variously called the "true money supply" or the "Austrian money supply" that further differ slightly from other definitions referenced below.

Non-Austrian monetary aggregates
There are also a number of other monetary aggregates to measure and interpret the money supply.

M0
According to the Bank of England, M0 or "narrow money" is composed of notes and coin in circulation outside the Bank of England, and banks’ operational deposits with the Bank of England. It is not published by this bank since 2006, but other banks continue using variants of it.

M1
According to the European Central Bank, M1 is defined as currency in circulation plus overnight deposits.

The Federal Reserve defines M1 as:


 * M0, or base currency: the face value amount of fiat physical U.S. notes, dollar bills, and coins circulating.
 * + Demand deposits: the amount held in checking accounts and other forms of immediately refundable deposits. This also does not need to be held physically and can be kept purely as an account balance, which is what is meant by most Austrian authors when they describe that the FED 'prints money out of thin air'.
 * - Demand deposits due to the Treasury and depository institutions
 * + Travelers checks
 * - Federal Reserve float and cash items in process of collection.

M2
According to the ECB, M2 comprises M1 plus deposits with an agreed maturity of up to and including two years and deposits redeemable at notice of up to and including three months.

The Fed defines M2 as the following, and is taken by many economists of competing schools to be the definition of money:


 * M1
 * + Savings accounts
 * + Certificates of deposit of small denomination (under $100,000)
 * + Money market accounts
 * + MMMFs and other retail money market mutual funds

M3
For the ECB, M3 comprises M2 plus repurchase agreements, money market fund shares and units as well as debt securities with a maturity of up to and including two years.

For the Fed, M3 is:


 * M2
 * + large-denomination ($100,000 or more) time deposits
 * + repurchase agreements issued by depository institutions
 * + Eurodollar deposits, specifically, dollar-denominated deposits due to nonbank U.S. addresses held at foreign offices of U.S. banks worldwide and all banking offices in Canada and the United Kingdom
 * + institutional money market mutual funds (funds with initial investments of $50,000 or more, also known as 'MMMFs').

MZM
The MZM used by the Fed ("money, zero maturity", i.e., all paper that can be 'immediately liquidated') is:


 * M2
 * - small-denomination time deposits
 * + institutional money market mutual funds (that is, those included in M3 but excluded from M2).

M4
For the Fed, M4- is:


 * M3
 * + Commercial Paper (an unsecured promissory note (e.g., a formal IOU), typically introduced by large corporations)

M4 simply also adds:


 * + T-Bills

L
L is currently the broadest measure of money, and is meant to represent total Liquidity in some sense. It is


 * M4
 * + Banker's Acceptance (promissory notes backed by a bank)

Changes in the money supply
An increase in the money is called inflation, while a contraction or decrease is called deflation.