Money supply

Under money supply is defined as the entire money was an economy that is in hands of non-banks located. The money supply through monetary creation in the context of lending by commercial banks increased and by the repayment reduced from loans. A certain amount of money is therefore always offset by corresponding liabilities in the same amount.

General

The money supply of the non-banks is used to measure the money supply, i.e. that is in the hands of private households , companies (without credit institutions ), the state and abroad (without foreign banks ) . Economics and central banks measure the amount of money by means of monetary aggregates , which are denoted by (for English money ) and a number. The monetary aggregate is a subset of and the latter a subset of . A lower number means that the money supply under consideration is closer to immediate real economic transactions , i.e. H. the smaller the number, the more important is the function of money as a means of payment . ${\ displaystyle M}$ ${\ displaystyle M1}$ ${\ displaystyle M2}$ ${\ displaystyle M3}$

The delimitation of the individual aggregates is conventional and not uniform internationally. The monetary base (also monetary base ) occupies a special position. It is equal to the sum of the currency in circulation and the central bank money holdings of the credit institutions ( excess reserves plus minimum reserves ). except for the cash portion of non-banks, is not a subset of or higher, since central bank reserves are only used as means of payment between commercial banks. The monetary base is also in no fixed relation to the amounts up to . ${\ displaystyle M0}$ ${\ displaystyle M0}$ ${\ displaystyle M1}$ ${\ displaystyle M1}$ ${\ displaystyle M3}$

Money amount definitions

Money supply classifications of the Swiss National Bank

Money supply classifications of the Deutsche Bundesbank

European Central Bank definitions :

M0 : banknotes and coins outside the central bank (including cash on hand in commercial banks) plus central bank money held by credit institutions on accounts at the central bank;
M1 : currency in circulation with non-banks (i.e. excluding cash on hand in commercial banks ) plus sight deposits of non-banks;
M2 : M1 plus deposits with an agreed term of up to two years and deposits with a statutory notice period of up to three months;
M3 : M2 plus units in money market funds, repo liabilities , money market papers and bank bonds with a term of up to two years.

Definitions of the Swiss National Bank :

M0 : Central bank money stock, i.e. banknotes in circulation plus sight deposits of domestic commercial banks at the SNB;
M1 : cash in circulation plus sight deposits ;
M2 : M1 plus savings in Swiss francs;
M3 : M2 plus time deposits in Swiss francs.

Fed Definitions :

M0 : cash in circulation plus bank balances with the Fed;
M1 : cash in circulation plus sight deposits from non-banks at credit institutions;
M2 : M1 plus savings, time deposits up to $ 100,000 and certain money market fund shares;
M3 : M2 plus all major balances over US $ 100,000 and the like a. the Eurodollar reserves, major holdings of US dollar transferable securities, and the US dollar foreign exchange holdings of most non-European countries. This money supply has not been recorded since 2006.
MZM : “money of zero maturity” consists of cash plus current and savings accounts, private money market accounts plus institutional fixed-term and money market accounts.

Definitions of the Deutsche Bundesbank :

M1 (1998: DM 910.2 billion): currency in circulation (excluding cash on hand of monetary financial institutions (MFIs)) plus overnight deposits from non-MFIs (non-banks) resident in the currency area;
M2 (1998: DM 1302.7 billion): M1 plus deposits with an agreed term of up to two years and deposits with an agreed notice period of up to three months;
M3 (1998: DM 2,239.8 billion): M2 plus shares in money market funds, repo liabilities, money market papers and bank bonds with a term of up to two years. This aggregate is at the fore in the Eurosystem's monetary policy .

European Central Bank money supply

Development of the M3 money stock in the euro area from 1980 to 2018

Development of the M0, M1 and M2 money stocks in the USA from 1959 to 2014

Annual change in US money supply from 1959 to 2014


time	Money supply in billions of euros			source
time	M1	M2	M3	source
January 2000	1,983	4.138	4,715
January 2001	2,084	4,349	5,027
January 2002	2,239	4,656	5,428
January 2003	2,441	4,924	5,807
January 2004	2,703	5,271	6.164
January 2005	2,966	5,637	6,570
January 2006	3,444	6.134	7,100
January 2007	3,686	6.704	7,813
January 2008	3,852	7,449	8,768
January 2009	4,096	8.102	9,402
January 2010	4,554	8,235	9,326
January 2011	4,709	8,435	9,527
January 2012	4,784	8,620	9,759
January 2013	5.113	9.003	9,769
January 2014	5,433	9,248	9,898
January 2015	6,042	9,743	10,438
January 2016	6,667	10,272	10,909
January 2017	7,229	10,733	11,421
January 2018	7,798	11,261	11,905
January 2019	9.234	11,631	12,272

Money supply worldwide

country	Money supply in billions U.S. dollar		time
country	M1	M2	time
China People's Republic People's Republic of China	8,160	25,240	October 2017
United States United States	3,627	14,000	December 2017
Japan Japan	6,426	8,917	December 2017
Germany Germany	2,312	3,282	December 2017
United Kingdom United Kingdom	104.8	3,066	December 2017
France France	1,372	2,338	December 2017
Korea South South Korea	742.5	2.167	December 2017
India India	429.3	2,063	December 2017
Hong Kong Hong Kong	310.3	1,736	December 2017
Italy Italy	1,238	1,694	December 2017
Australia Australia	271.9	1,586	December 2017
Canada Canada	715.3	1,554	December 2017
Taiwan Taiwan	535.1	1,374	December 2017
Spain Spain	1,082	1,337	December 2017
Switzerland Switzerland	619.4	1,335	December 2017
Netherlands Netherlands	452.7	907.1	December 2017
Mexico Mexico	235.5	772.5	December 2017
Brazil Brazil	106.1	761.2	December 2017
Russia Russia	204.9	688.4	December 2017

Money supply, growth and inflation

The real money supply describes the price-adjusted nominal money supply . It is represented as the quotient of the nominal money supply and the price level and is a variable parameter as long as the central bank can control the nominal money supply: ${\ displaystyle M_ {r}}$ ${\ displaystyle M_ {n}}$ ${\ displaystyle P}$

{\ displaystyle M_ {r} = {\ frac {M_ {n}} {P}}}

According to quantity theory , the real money supply is determined endogenously from the money demand. First, an increase in the nominal money supply leads to an increase in the real money supply. This causes a higher demand for goods, which results in an increase in the price level. Due to inflation (rise in the price level) the real money supply is reduced again. This relationship is known as the real cash effect .

The money supply is also essential for determining the growth opportunities and inflation risks of the economy. If too little money is in circulation (“ money gap ”), this has a dampening effect on economic growth and inflation and vice versa.

In contrast, the amount of central bank money in the market (also called liquidity), which u. a. used for the processing of transactions between central banks and commercial banks as well as commercial banks among themselves, although it has an impact on the general level of interest rates, it only has an indirect impact on money supply growth and real economic variables.

Web links

Wiktionary: Amount of money - explanations of meanings, word origins, synonyms, translations

Individual evidence

^ Deutsche Bundesbank: Glossary: Money Supply ( Memento from September 19, 2010 in the Internet Archive ) . Without a date. Retrieved August 16, 2011.
^ Jürgen Pfannmöller, Kreative Volkswirtschaftslehre , 2018, p. 193
^ Gabler Wirtschaftslexikon: monetary base . Without a date. Retrieved August 16, 2011.
↑ Deutsche Bundesbank, Monthly Report April 2017 , The role of banks, non-banks and central banks in the money creation process, page 16
^ European Central Bank: Monetary aggregates . Retrieved August 16, 2011.
↑ https://www.bundesbank.de , Glossary, Central Bank Money
↑ Definitions on the website of the SNB ( Memento of February 17, 2015 in the Internet Archive ) . Retrieved August 13, 2013.
↑ Fed's definition of money supply.
^ Federal Reserve: Discontinuance of M3 . March 3, 2006. Retrieved February 13, 2014.
↑ The $ 1 Billion Solution ( Memento February 14, 2009 in the Internet Archive ) . In: calesinvestments.com , March 15, 2008. Retrieved August 16, 2011.
↑ ^a ^b ^c ^d ^e ^f ^g ^h EZB Statistics ( Memento from March 3, 2012 in the Internet Archive ) (zip; 305 kB), February, 2012.
↑ ^a ^b ^c ^d ^e ^f ^g ^h ⁱ Historical monetary statistics ( Memento from February 6, 2012 in the Internet Archive ) (PDF; 16 kB), July, 2012.
↑ MONETARY DEVELOPMENTS IN THE EURO AREA: JANUARY 2012 (PDF; 71 kB) February 27, 2012.
↑ ^a ^b [1]
^ The World Factbook - Central Intelligence Agency. Accessed July 6, 2018 .
^ The World Factbook - Central Intelligence Agency. Accessed July 6, 2018 .
↑ Gustav Dieckmann: Macroeconomics: Theory and Politics. 5th edition. Springer, 1992, ISBN 3-540-00564-1 , p. 152 ff.
↑ Michael Heine, Hansjörg Herr: Economics. Oldenbourg Wissenschaftsverlag, Munich 2002, ISBN 978-3-486-27293-2 , p. 281 ff.
^ Deutsche Bundesbank: Glossary - Liquidity. Retrieved June 10, 2018 .
^ Deutsche Bundesbank: Glossary - Central Bank Money. Retrieved June 10, 2018 .
^ Deutsche Bundesbank: How money is made. April 25, 2017. Retrieved June 10, 2018 .

[1] Deutsche Bundesbank: Glossary: Money Supply ( Memento from September 19, 2010 in the Internet Archive ) . Without a date. Retrieved August 16, 2011.

[2] Jürgen Pfannmöller, Kreative Volkswirtschaftslehre , 2018, p. 193

[3] Gabler Wirtschaftslexikon: monetary base . Without a date. Retrieved August 16, 2011.

[4] Deutsche Bundesbank, Monthly Report April 2017 , The role of banks, non-banks and central banks in the money creation process, page 16

[5] European Central Bank: Monetary aggregates . Retrieved August 16, 2011.

[6] ttps://www.bundesbank.de , Glossary, Central Bank Money

[7] Definitions on the website of the SNB ( Memento of February 17, 2015 in the Internet Archive ) . Retrieved August 13, 2013.

[8] Fed's definition of money supply.

[9] Federal Reserve: Discontinuance of M3 . March 3, 2006. Retrieved February 13, 2014.

[10] The $ 1 Billion Solution ( Memento February 14, 2009 in the Internet Archive ) . In: calesinvestments.com , March 15, 2008. Retrieved August 16, 2011.

[ecb_stat1-11] ↑ ^a ^b ^c ^d ^e ^f ^g ^h EZB Statistics ( Memento from March 3, 2012 in the Internet Archive ) (zip; 305 kB), February, 2012.

[ecb_stat2-12] ↑ ^a ^b ^c ^d ^e ^f ^g ^h ⁱ Historical monetary statistics ( Memento from February 6, 2012 in the Internet Archive ) (PDF; 16 kB), July, 2012.

[ecb_stat3-13] MONETARY DEVELOPMENTS IN THE EURO AREA: JANUARY 2012 (PDF; 71 kB) February 27, 2012.

[ecb_stat4-14] [1]

[15] The World Factbook - Central Intelligence Agency. Accessed July 6, 2018 .

[16] The World Factbook - Central Intelligence Agency. Accessed July 6, 2018 .

[17] Gustav Dieckmann: Macroeconomics: Theory and Politics. 5th edition. Springer, 1992, ISBN 3-540-00564-1 , p. 152 ff.

[18] Michael Heine, Hansjörg Herr: Economics. Oldenbourg Wissenschaftsverlag, Munich 2002, ISBN 978-3-486-27293-2 , p. 281 ff.

[19] Deutsche Bundesbank: Glossary - Liquidity. Retrieved June 10, 2018 .

[20] Deutsche Bundesbank: Glossary - Central Bank Money. Retrieved June 10, 2018 .

[21] Deutsche Bundesbank: How money is made. April 25, 2017. Retrieved June 10, 2018 .