Defining the Money Supply

The most common measures are named M0 (narrowest), M1, M2, and M3 (broadest).
M0 is the starting point for the concept of money supply. It is the total of all electronic, credit-based deposit balances in bank (and other financial) accounts plus all physical currency (minted coins and printed paper). In the U.S. it includes accounts at the central bank that can be exchanged for physical currency.
M1 includes M0, plus the total of (non-paper or coin) deposit balances without any withdrawal restrictions known as “demand accounts (”chequing” or “current” accounts”). We commonly think of saving accounts and chequing accounts as identical but they are not. Restricted accounts that you can’t write checks on are put in the next level of liquidity, M2. In View the rest of this article