Money supply

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newratings.com  Jan 21  Comment 
BRUSSELS (dpa-AFX) - Switzerland's money supply growth slowed in December, after improving in the previous two months, figures from the Swiss National Bank showed Thursday. M3, the broad measure of money supply, rose at a slower pace of 1.6...
newratings.com  Jan 15  Comment 
SOFIA (dpa-AFX) - Bulgaria's money supply growth slowed at the end of the year, after accelerating sharply in the previous month, figures from the Bulgarian National Bank showed Tuesday. M3, the broad measure of money supply, climbed at a...
newratings.com  Dec 30  Comment 
BRUSSELS (dpa-AFX) - Eurozone money supply increased at a slower pace in November and annual growth in loans to households improved from October, the European Central Bank reported Wednesday. The broad monetary aggregate M3 climbed 5.1...
newratings.com  Dec 23  Comment 
PRAG (dpa-AFX) - Czech money supply growth quickened for the third straight month in November, figures from the Czech National Bank showed Thursday. M2, a broad measure of money supply, climbed 8.6 percent year-over-year in November, following a...
newratings.com  Nov 24  Comment 
SOFIA (dpa-AFX) - Bulgaria's money supply growth quickened in October, figures from the Bulgarian National Bank showed Tuesday. M3, the broad measure of money supply, climbed at a faster pace of 2.7 percent year-over-year in October,...
newratings.com  Nov 23  Comment 
BRUSSELS (dpa-AFX) - Swiss money supply growth accelerated slightly in October after easing in the previous three months, figures from the Swiss National Bank showed Monday. M3, the broad measure of money supply, rose 1.4 percent year-over-year...




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Money supply is a way to measure currency in circulation. Its growth rate relative to inflation and GDP can indicate monetary inflation or deflation. According to the Austrian school of economics inflation is a result of a strongly rising monetary base as this process creates more money than the expansion of the economy would require.

Money Supply Definitions

Money supply is divided into different categories according to the size and maturity of deposits. There is no single international convention defining monetary aggregates from M0 to M4 which vary between countries. Empirical evidence has shown a strong correlation between the growth of money in circulation and rising prices.

USA

  • M0: All physical curency, plus accounts at the central bank that can be exchanged for physical currency.
  • M1: M0 - those portions of M0 held as reserves or vault cash + the amount in demand accounts ("checking" or "current" accounts).
  • M2: M1 + most savings accounts, money market accounts, and small time deposits under $100,000.
  • M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.

The Federal Reserve ceased to publish M3 figures in February 2006.[1] Chairman Ben Bernanke later told policymakers that the costs outweighed the benefits. The total savings effect of $1.5 million came to 0.00000699% of the Fed's annual net income in 2005.[2]

Eurozone

  • M1: Currency in circulation + overnight deposits
  • M2: M1 + Deposits with an agreed maturity of up to 2 years + deposits redeemable at a period of notice of up to 3 months
  • M3: M2 + Repurchase agreements + Money market fund deposits + debt securities with a maturity of up to 2 years

The ECB publishes a monthly report on the growth of money supply in the Eurozone.

UK

  • M0: Cash outside Bank of England + Banks' operational deposits with Bank of England.
  • M4: Cash in circulation + private-sector retail bank and building society deposits + Private-sector wholesale bank and building society deposits and Certificate of Deposit.

In the UK M0 is referred as "narrow money" and M4 as "broad money" or simply "the money supply."

Australia

  • M1: currency in circulation + bank current deposits of the private non-bank sector
  • M3: M1 + all other bank deposits of the private non-bank sector
  • Broad Money: M3 + borrowings from the private sector by NBFIs, less the latter's holdings of currency and bank deposits
  • Money Base: holdings of notes and coins by the private sector plus deposits of banks with the Reserve Bank of Australia (RBA) and other RBA liabilities to the private non-bank sector.

As defined by the Reserve Bank of Australia.


Japan

  • M1: cash in circulation + deposit money
  • M2 + CDs: M1 + quasi-money + CDs
  • M3 + CDs: (M2 + CDs) + deposits of post offices + other savings and deposits with financial institutions + money trusts
  • Broadly-defined liquidity: (M3 + CDs) + pecuniary trusts other than money trusts + investment trusts + bank debentures + commercial paper issued by financial institutions + repurchase aggreements and securities lending with cash collateral + government bonds + foreign bonds

As defined by the Bank of Japan (BoJ.)

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