Means of payment into liquid aggregates m1. The money supply is massive. Money supply M4

Money Supply M1

Money Supply M1

Monetary aggregate M1 - in the United States - the narrowest measure of the money supply, including deposits not owned by the federal government, central bank or financial institutions:
+ cash (currency); the share of cash in M1 is less than 1/3;
+ funds on current accounts (transaction deposits);
+ demand deposits;
+ other deposits on which checks can be written (other checkable deposits).
The M1 structure does not include "plastic money".

In English: Monetary aggregate M1

Synonyms: Money for transactions

English synonyms: Transaction money

Finam Financial Dictionary.

See what "M1 money supply" is in other dictionaries:

The United States has the broadest definition of money supply. L = M3 + short-term Treasury securities. In English: Monetary aggregate L See also: Monetary aggregates Financial dictionary Finam ... Financial vocabulary

In the United States, the measure of money supply, covering the medium of circulation and the means of accumulation. M2 = M1 + + money market deposit accounts; + shares of open-type investment funds (money market mutual fund shares); ... Financial vocabulary

In the United States, the measure of money supply, covering M2 + large time deposits (100 thousand dollars or more); + long term buyback agreements. In English: Monetary aggregate MЗ See also: Monetary aggregate Financial vocabulary ... ... Financial vocabulary

monetary aggregate- A composite monetary variable used to measure the money supply in circulation (and as such is sometimes taken as an interim objective of monetary policy or an indicator of the state of the monetary sphere), which includes ... Technical translator's guide

- (M1) Broader measure of money supply. In the UK, M1 includes banknotes and coins in circulation plus funds in private current accounts plus funds in deposit accounts for which checks are written. In the USA, this is ... ... Economic Dictionary

- (M0) The narrowest measure of money supply used in the UK. It includes banknotes and coins in circulation, bank cash and balances on correspondent accounts of commercial banks in ... Economic Dictionary

- (M2) The indicator that best corresponds to the definition of money in the broad sense of the word. In the UK, M2 includes banknotes and coins in circulation plus funds on interest-free bank deposits, plus funds on deposits ... ... Economic Dictionary

Money supply L- MH's monetary aggregate plus other liquid assets (for example, treasury bills and US savings bonds) ...

Money supply M2- monetary aggregate Ml plus the following components: 1) savings deposits and time deposits of small sizes in all depository institutions; 2) one-day REPO agreements in commercial banks; 3) overnight loans in Eurodollars of US residents ... ... Modern money and banking: a glossary

MH money supply- monetary aggregate M2 plus the following components: 1) large time deposits (over $ 100,000) in all depository institutions; 2) urgent REPO agreements with commercial banks and savings and loan associations; 3) mutual funds ... ... Modern money and banking: a glossary

Money supply and monetary aggregates- these are interrelated and interdependent concepts.

Money supply is called a set of payment, purchasing and accumulated funds belonging to individuals, as well as legal entities and the state itself, involved in the process of servicing economic ties. The money supply characterizes the movement of money in quantitative terms.

The mass of money is understood as both cash and non-cash funds. By structure, it is divided into an active part (those cash that serve the farm) and the passive part (savings and bank balances, which are potential settlement funds).

The mass of money is not simple and does not coincide with cash. In fact, the share of cash in the mass of money is not so large, since all business entities make transactions with each other on the basis of through bank accounts.

The level of development of a country determines the stability of money circulation and the share of cash in the total mass of money. For example, in the USA this figure does not exceed 5-10%, in the CIS countries - 30%. The more in the total mass of all the money in the country, the less flexible is the monetary system itself. Money supply and monetary aggregates must be in the correct ratio to ensure proper functioning

In the composition of the mass of money, such components are allocated that cannot be directly used as means of payment and purchasing means. These are funds on time savings deposits, shares, etc. They are called "quasi-money" (from Lat. "Almost"). This part of money in the overall structure is a very significant and significant part.

The structure of the mass of money and its composition constantly changing. At different stages of the development of commodity exchange and payment relations, it was different. With gold circulation at the beginning of the last century, the structure of the mass of money in developed countries was approximately as follows: 40% were gold coins, 40% banknotes, 10% balances on accounts of various types of credit institutions. Immediately before the 1st World War, these indicators changed accordingly: 15%, 22%, 67%.

To analyze the movement of money and changes in this process for a certain period, they use money supply and monetary aggregates different categories.

Monetary aggregates are indicators of the amount of money or financial assets that make up the mass of money.

The money supply and monetary aggregates in this sense are intertwined. The so-called aggregates represent a stepped hierarchical structure in which each subsequent aggregate will include the previous ones. At the same time, each subsequent indicator includes less liquid assets. They are expressed in terms such as monetary aggregates m1 m2 m3, m4, as well as m0.

Unit M0 - cash in circulation (coins, banknotes, treasury bills).

Unit Ml includes unit M0 and funds in current accounts used for

The M2 aggregate includes Ml and deposits in commercial banks, short-term government securities that can become cash or checking accounts.

The MZ aggregate includes M2 and savings deposits in credit institutions, as well as money market securities.

M4 aggregate includes M3 and deposits in credit institutions.

Monetary aggregates in Russia for calculating the money supply are used in the following order: these are M0, Ml, M2 and MZ. The money supply in Russia is characterized by a high share of cash, and this trend is not going to decline. For a more promising development of the monetary system, the money supply and monetary aggregates of Russia should move into the channel of greater weight of non-cash payments.

Monetary aggregate- an indicator of the amount of money or financial assets classified as money supply

In economic theory, the following aggregates of the money supply are distinguished:

• M0 - cash;
• M1 - financial assets that can be immediately used for settlements (cash and demand deposits);
• M2 - is formed by adding the aggregate M1 and the most common types of time deposits;
• M3 - is formed by accounting for the M2 aggregate and some types of large time deposits and fixed-term agreements on the reverse issue (certificates of deposit, government bonds);
• L is the broadest of all monetary aggregates, summarizing all monetary funds and financial assets.

The composition of monetary aggregates is not the same in different countries.

Monetary aggregates are a hierarchical system: each subsequent aggregate includes the previous one. Monetary aggregates differ among themselves not only in the composition of the money supply, but also in the level of liquidity. The highest liquidity is possessed by the monetary aggregate M0 (cash), the liquidity of M1 is lower than M0, but higher than M2, since demand deposits must be returned to the depositor at his request, and time deposits can be used by the bank at its discretion throughout the entire period deposit and returned to the depositor only after this period.

Money supply M0

The M0 money supply is cash - coins and paper money.

Coin that makes up only a small part of the money supply: currently - only 2 or 3% of the total money supply M1. Metal money is "convenient money" that allows us to make any kind of small purchases.

All metallic money circulating in the country is symbolic money... It means that actual value- the cost of the metal ingot from which the coin is actually made is less than the face value of the coin. This prevents token money from being melted down in order to profitably sell it as gold or silver bars. If, for example, every 50 cent nonet in the United States contained 75 cents of silver, it would be very profitable to melt it down and sell it as a bullion. Despite the illegality of such actions, 50 cents would quickly disappear from circulation. This is one of the potential disadvantages of commodity money. If their value as a commodity exceeds their value as money, then they will cease to exist as a medium of exchange.

Paper money makes up about 28% of the money supply Ml in economics. In the United States, all billions of dollars of paper money are in the form Federal Reserve banknotes, that is, banknotes that are issued by the Federal Reserve Bank with the permission of Congress. Casting a quick glance at any American money, you will notice an inscription on the top left of the front surface of the banknote FederalReserveNote and the sign of the Reserve Bank that issued it under the caption.

Money supply M1

First money supply M1 includes cash and transaction deposits, that is, deposits from which funds can be transferred to others as payments by checks or wire transfers. Since in countries with developed market economies, including those with a modern financial market, most exchange transactions are carried out using the first monetary aggregate, it is called an aggregate in the narrow sense in which money is used as a medium of circulation.

Bank deposits (deposits) is the largest component of the M1 money supply. There are many financial institutions offering deposit placement services.

1. Commercial banks. These banks form the backbone of the system. They accept deposits from individuals and businesses and use their financial resources to provide many different types of loans. Loans from commercial banks serve as a source of short-term working capital for entrepreneurs and firms, and for consumers as a way to finance the purchase of cars, other durable goods, etc.

2. Savings institutions. Commercial banks are complemented by many other financial institutions - savings associations and credit unions - collectively referred to as savings institutions.Credit unions accept contributions from their “members” - usually a group of people working for the same company - and provide these funds to finance installment purchases.

Deposits in banks and savings institutions are called differently: demand deposit; NAU account (negotiableorderofwithdrawal (NOW) account); account with automatic funds transfer, or ATC account (automatictransferservice (ATS) account); checking mutual account. But despite such a variety of names, all these deposits are similar in one thing: depositors can withdraw these funds at any time and for any amount at their own discretion.

Throughout most of the 20th century (until the 90s), the M1 aggregate was considered as the most accurate measure of the money supply. However, at present, with the development of credit relations, the dependence of the key parameters of the national economy on the M2 aggregate has become more obvious, which is currently considered as the most important object of monetary policy.

Monetary aggregate- an indicator of the amount of money or financial assets classified as money supply

Money supply M2

Second money supply M2 has a broader character than the monetary aggregate M1 since money is used in it as well as a means of accumulation. It includes those assets that have a fixed par value and can be converted into a means of payment. But directly specified assets cannot be transferred from one person to another. The most familiar to us are deposit accounts, demand savings and time deposits. They do not give asset owners the right to use checks, and demand deposits bring negligible interest. In addition, in the financial markets of developed countries, the monetary aggregate M2 includes money market mutual funds, that is, those intermediaries who give the so-called titles of ownership to the population and use the proceeds to buy short-term securities with a fixed interest rate. The resulting profits from these securities are transferred to the title holders. Although in principle money market funds can be used for payments, in practice this rule is rarely used.

The M2 monetary aggregate includes highly liquid financial assets such as time deposits and short-term government securities, which, although they do not function directly as a medium of exchange, are easily converted into cash. This allows you to withdraw cash from term deposit at a commercial bank or savings institution. Or, you can also request the transfer of funds from such an account to a current account.

It is necessary to pay attention to the fact that each country has its own official definition of the monetary aggregate M2. For example, in the UK, M2 is an indicator of the money supply, which includes cash in circulation, sterling current and interest accounts of the private sector in banks, deposits in building societies and savings banks; in the USA - M1 plus savings accounts, time accounts up to 100 thousand dollars, one-day Eurodollar deposits, stocks of money market mutual funds, etc. Therefore, while understanding the essence of this monetary aggregate in general, the nuances may differ significantly.

In general, the monetary aggregate M2 is intended not for circulation, but for accumulation, and that is why it is characterized as a liquid means of accumulation. It is the relationship of the state with M2 that necessitates the devaluation and revaluation of the currency.

Monetary aggregate M2 better reflects the relationship of the money supply with other economic variables that appear in
the equation of money exchange: M * V = Py, namely, with the velocity of circulation of money V, the weighted level of prices P and the real volume of production y. Therefore, since the 1980s, many economists have become inclined to believe that the M2 parameter is more suitable as a basis for the theory and conduct of economic policy.

There are, however, other points of view, the supporters of which do not consider any of the parameters (M1, M2 and M3) to be optimal, and therefore they recommend choosing such a monetary aggregate that would represent a general weighted aggregate of all liquid assets.

Money supply- this is the supply of money in the state.

The money supply serves the movement called money circulation.

The totality of all the money in a given country from the government, firms, banks, citizens, in accounts, on the way, in wallets, in "stockings", etc. forms national money supply... Money circulation as a whole is divided into cash and non-cash. Non-cash circulation is much higher than cash (Fig. 1):

In countries with unreliable banking systems, the ratio of cash and non-cash money supply looks differently (Fig. 2):

The concept of liquidity is used not only in relation to, but also to, the international monetary system, etc. Liquidity in relation to money is its property to be used by its owner for the immediate acquisition of the necessary benefits. Depending on the specific form in which money exists (cash and non-cash), the liquidity of money increases or, on the contrary, decreases. So, cash is much more liquid than non-cash money, and in non-cash money supply, money in current accounts, which can be used by checks, transfers, credit cards, is much more liquid than money in time deposits, since there is a time limit on the latter during which the account holder does not can use the entire amount of the deposit, but only the interest on it.

• Money in time and savings bank deposits;
• Money on demand deposits (current) checks, bills of exchange, payment orders, credit cards, electronic money, traveler's checks;
• Cash, banknotes, banknotes, treasury bills, loose change, securities;

System of money supply aggregates

Since 1992, the Russian Federation has switched to the calculation of monetary aggregates.

The money supply is divided by monetary aggregates(from to), which include different kinds money.

Monetary aggregates - a grouping of bank accounts according to the degree of speed of converting funds in these accounts into cash. The faster the funds on the accounts can be converted into monetary form, the more liquid the aggregate is considered.

The system of aggregates of money supply is "Matryoshka", in which each previous unit is "inserted" into each subsequent one.

Money supply M0

Into the unit M 0 includes all types of money with high degree liquidity.

Different types of money and different types allow you to enter a certain classification of money, depending on the degree of their liquidity and scope. This found expression in the creation of a system of money supply aggregates used in the analysis of the national systems of monetary circulation in various countries. The initial assembly includes cash and checks:

M 0 = C + checks,

where WITH- initial money supply (cach).

Cash, in turn, consists of paper money, banknotes and a small change.

1st sign... Cash is issued into circulation by the Russian Federation, then the Central Bank of the Russian Federation takes measures to preserve their purchasing power. Thus, cash is a promissory note of the Central Bank of the Russian Federation, that is, the Central Bank of the Russian Federation guarantees its purchasing power.

2nd sign... Non-cash money on current settlements and other accounts on demand and on time accounts. These are promissory notes to their clients. At the same time, the Central Bank of the Russian Federation controls and regulates the activities of commercial banks, ensuring the liquidity of commercial banks, that is, the ability to pay debts.

3rd sign... Banknotes, coins, non-cash money in circulation in the form of entries on accounts are legal tender. Therefore, they are accepted as payment for contracts according to their functions.

4th sign... Modern money (in the narrow sense of the word) is convenient and acceptable for use by people.

5th sign. M 1 has absolute liquidity, therefore M 1 banknotes performing the functions of money.

Money supply M2

In addition to money, that is, the aggregate, the money supply includes purchasing and means of payment that do not have absolute liquidity. These include a bill of exchange, bond, certificates of deposit. In a non-cash form: term deposits in bank accounts.

Unit M 2 complements to M 1 term deposits:

M 2 = M 1 + time deposits.

In case of a term deposit, the account holder transfers his funds to the bank for some time. If necessary, the money can be withdrawn from the term deposit before the due date, but at the same time the client may have losses (the interest on the deposit has not been paid). This shows that a term deposit is almost money. In the conditions of the Russian Federation, the level of liquidity of the unit is close to absolute, therefore, a term deposit is usually issued to a client on demand.

Funds on time deposits further reduce the liquidity of the unit M 2 compared with M 1 and M 0 and involve the maintenance of savings, savings, investments.

Money supply M3

Unit M 3 assumes an increase in the unit M 2 due to:

M 3 = M 2 + government securities.

These securities (mainly government bonds) are no longer quite full-fledged money, but they can still be transformed into other types of money (sold on the open market) and for this reason they are included in the money supply (Fig. 3).

Money supply structure

The structure of the money supply is constantly changing.

In the modern monetary system, the growth rate of the money supply has noticeably decreased and money began to work better. In the Russian Federation, among the shortcomings of the monetary system, one can note a large share of cash (42-65%), while in developed countries this indicator barely reaches 7-10%.

The ratio between the aggregates changes with economic growth.

The change in the volume of the money supply is the result of the influence of two factors:

• changes in the mass of money in circulation;
• change in the rate of their turnover.

Change in turnover rate

The velocity of circulation of money is determined using indirect methods:

Velocity of money circulation in the circulation of income= GDP / Money supply (M1 and M2). This indicator reveals the relationship between economic growth and money circulation.

Cash turnover rate= Arrival according to the forecast of the balance of cash turnover / the average annual value of the money supply in circulation.

Money turnover in payment circulation(shows the speed of cashless settlements) = The amount of funds on settlement, current and forecast accounts (bank accounts) / the average annual value of the money supply in circulation.

• general economic factors showing how production is going on, how the cyclicality changes economic development, rise in prices, growth rates of the most important sectors of the economy;
• monetary factors: what is the structure of the payment turnover (how much cash and non-cash money is involved), the development of credit operations, the development of mutual settlements, the level of the interest rate on the loan;
• the frequency of payments of money and income, the level of savings and savings, the uniformity of spending money.

The effect of inflation on the growth of the velocity of money circulation is explained by the fact that buyers increase their purchases in order to insulate themselves from economic losses due to a decrease in the purchasing power of money.

Rules for regulating the structure of the money supply

It is necessary to divide the money supply into,,, if it is necessary to ensure state regulation of the volume of the money supply and to prevent unforeseen (price increases).

When circulating money, it is not only the amount of absolutely liquid money that is important M1 but also that amount of money M2 which can quickly turn into M1... Also M3 may, under certain conditions, become a means of payment M1.

By distributing the money supply into aggregates, the Central Bank of the Russian Federation influences the money supply M1, increasing or decreasing (or restraining its growth).

Example... In the event of high inflation, the Central Bank pursues a policy to reduce the M1 money supply. To do this, the Central Bank sells, on behalf of the government, government securities of large denominations of other firms, banks, i.e., M1 - M3 (money supply M1 decreases).

For the population, the Central Bank of the Russian Federation sells securities of a lower face value and M1 - M2, the money supply M1 decreases.

The rule: if money goes to the banking system for a time deposit or to the budget, the money supply M1 decreases, money leaves the sphere of circulation M1.

If the Central Bank of the Russian Federation has raised the interest rate at which lending to banks is carried out, in turn, commercial banks raise the interest rate on time deposits.

It has become more profitable for people (depositors) to make time deposits - M2 rises, while M1 decreases - inflation is being held back.

For the term of the deposit, the money went to the disposal of the banking system (- M2).

Monetization rate

An important indicator of the state of the money supply is monetization ratio equal to

The monetization coefficient allows you to answer the question: is there enough money in circulation? It shows how much the gross product is backed by money (or how much money is in the ruble of GDP).

The monetization coefficient reaches 0.6, and sometimes is close to one. In Russia, this figure barely reaches 0.1.