Official Measures of Money: M1 and M2
There are two official measures of money known as M1 and M2.
According to New York Fed:
The money supply measures reflect the different degrees of liquidity—or spendability—that different types of money have. The narrowest measure, M1, is restricted to the most liquid forms of money; it consists of currency in the hands of the public; travelers checks; demand deposits, and other deposits against which checks can be written. M2 includes M1, plus savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds.
These two forms of money are summarized in the below table:
| M1 | M2 | |
|---|---|---|
| Currency and traveler's checks | Yes | Yes |
| Checking deposits | Yes | Yes |
| Time deposits | Yes | |
| Savings deposits | Yes | |
| Money market mutual funds and other deposits | Yes |
The European Central Bank has defined a narrow aggregate (M1), an "intermediate" aggregate (M2) and a broad aggregate (M3). These aggregates differ with regard to the degree of moneyness of the assets included. The following table summaries this:
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