Money Supply

Money supply is the total amount of money circulating in an economy, measured in aggregates that statisticians label M0 through M3. Narrow measures such as M0 and M1 cover physical cash and instantly spendable deposits, while broader measures add savings deposits, money-market balances and other near-money instruments. Central banks track these aggregates because sustained changes in the quantity of money can feed through to inflation, interest rates and, ultimately, exchange rates. Currency traders follow money-supply data as part of the broader monetary-policy picture. Programmes such as quantitative easing expand the supply of money, while quantitative tightening shrinks it, and the market weighs those shifts when pricing a currency. Money-supply releases appear on the economic calendar for most major economies, usually monthly.