Definition: Money supply

The money supply is the total amount of money in circulation in a country or group of countries in a monetary union. There are several ways in which this can be calculated:

M1 is a measure of money supply including all coins and notes plus personal money in current accounts;
M2 is M1 plus personal money in deposit accounts;
M3 is M2 plus government and other deposits.
Dictionary of Banking and Finance, Second Edition, P.H. Collins, 1991, Peter Collins Publishing, quoted in Organization for Economic Cooperation and Development (OECD), "Measuring the Non-Observed Economy - A Handbook", OECD, Paris, 2002

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