moneysupply

Money supply is the total quantity of monetary assets available in an economy at a given time. It includes currency in circulation outside the central bank and the deposits that households and businesses can access to make payments. Monetary authorities track several monetary aggregates to gauge liquidity and policy effects. Common measures include base money (M0), narrow money (M1), and broad money (M2); some systems also publish broader aggregates such as M3. Definitions vary by country.

Central banks influence the money supply through tools such as open market operations, reserve requirements, and policy interest rates. Banks also contribute to money creation by extending credit; when a loan is made, deposits rise, expanding the money supply within the banking system. The simple money multiplier is a heuristic and has limitations, especially when borrowers save, repay debt, or when banks' balance sheets constrain lending.

Policy changes that increase liquidity or reduce the cost of borrowing tend to raise the money supply and can lower interest rates, potentially stimulating spending and investment. Conversely, tighter policy or balance-sheet stress can shrink liquidity. The link between money supply and inflation is not mechanical and depends on output, velocity of money, and financial conditions; long-run trends vary with economic growth.

Unconventional measures, such as quantitative easing, can raise the monetary base and influence longer-term rates when conventional policy tools are constrained. Central banks publish data on money supply to inform policy decisions and monitor financial stability.