Money Supply Measures

Key Takeaways

  • M1 consists of the most highly liquid assets, including coin and currency in circulation, traveler's checks, demand deposits, and other checkable deposits.
  • M2 is a broader measure of money than M1. It includes all of M1, plus savings accounts, money market deposit accounts, small-time deposits, and retail money market mutual funds.
  • M3 is an even broader definition of the money supply that includes M2 plus large-denomination time deposits, balances in institutional money funds, repurchase liabilities, and eurodollars held by U.S. residents at foreign branches of U.S. banks.
  • In 2009, the U.S. M1 was at just over $1.6 trillion, around 10 percent of the U.S. gross domestic product (GDP).