What is m1 in economics. Money supply and monetary aggregates
When the first “free” money appeared, I began to think about where to invest it. After all, passive income is the dream of any successful person. The investor needs to understand the situation on financial market countries. This will be discussed in the article. I will tell you how the state determines the level of financial security, and what forecasts can be made.
money supply- all means of payment in the country, cash and non-cash.
Monetary Aggregates- the generalized name of the categories of money.
money supply- this is the totality of monetary aggregates.
The following monetary aggregates are distinguished: М0, М1, М2, М3.
monetary aggregate М0- it's cash. Banknotes and coins, at the cash desks of enterprises (except banks) and in the hands of the population.
In the practice of other states, M0 includes transport checks, check deposits.
M1 includes M0 and funds on demand accounts. Demand accounts are current accounts individuals, settlement accounts of enterprises, funds of insurance companies.
“In the narrow sense,” the M1 aggregate is money, that is, funds for subsequent exchange.
In the US, M1 still includes small (up to $100,000) term deposits.
M2 includes M1 and money on term deposits (deposits).
For time deposits, the bank sets a certain period of storage, until the expiration of which the depositor cannot use the funds. Term deposits are also called "quasi-money" and denoted by QM. QM are funds "frozen" for individuals and legal entities, "quasi-money" cannot be used instantly, they are at the disposal of the banking system, withdrawn from circulation.
In the “broad sense”, money is the monetary aggregate M2. They can be used for payments, but are kept more for the purpose of savings.
Sometimes there is a need to allocate an intermediate indicator of the expanded money supply. It includes M2 and term deposits in foreign currencies.
M2 and government securities (certificates and government bonds) is an aggregate M3.
The M2 unit in Russia is used to determine the money supply. In other countries, for example, in the USA, a fourth indicator is distinguished - M4, and is used as the value of the money supply. It consists of M3 and the amount of government loans.
Ratio between aggregates
M2 should be greater than M1, then equilibrium in the economy occurs.
Strengthening of this result is achieved if the sum of M3 and M2 is greater than the aggregate M1.
If this ratio is violated, there is an increase in prices, a shortage of banknotes.
The ratio between M0 and M2 shows the role of cash in the economy. The higher this indicator, the worse: this situation is typical for an undeveloped economic system.
The ratio of M0 and M1 indicates the role of cash in payments and obeys the same rule: the indicator increased - the situation on the market worsened.
Based on the latest data from the Central Bank of the Russian Federation in February 2019, M0 is 19.66% in the structure of M2, deposits of the population in M1 - 48.75%, organizations - 31.59%. M1 is greater than M0, a positive trend.
M2 for February 2019 amounted to 45,000 million rubles, M1 - 20,748.3 million. M2 is greater than M1.
The monetary balance is observed, however, the M2 growth rate has decreased from 11.9% since December 2018 to 9.9%.
Monetary Aggregates: Why Calculate Them
The Central Bank monthly determines the dynamics of changes in M0, M1, M2, M3 in order to understand the level of provision of the state with means of payment.
The state analyzes the dynamics of the country's economy in the context of M2.
The government influences M1 by raising or lowering its growth, depending on how the dynamics need to be changed. It is necessary to reduce M1, for example, at a high level of inflation.
The state starts issuing bonds, as a result, funds are withdrawn from circulation: M1 decreases, M3 increases.
To curb the growth of M1, the Central Bank raises the interest rate on bank lending. If such a situation develops, interest rates in the banking sector on deposits increase.
For an investor, this situation on the market is beneficial: funds can be deposited in a savings account at a higher interest rate.
As a result, the number of deposits increases, the M1 money supply decreases, and inflation is curbed.
Another situation: the economy is in recession. The state is interested in increasing M1, the interest rate on deposits eventually decreases. It is not worth investing money in deposits, you should pay attention to the shares of enterprises for additional income.
Also compare M0 with other units. If the value of M0 has increased as a percentage compared to other aggregates, then the funds are “at home under the pillow”, and are not stored in the bank, providing the country with credit funds.
Liquidity М0, М1, М2, М3
To understand what liquidity is, let's analyze the functions of money: payment (function of circulation), savings, value (measure of value).
Liquidity is the property of means of payment to circulate quickly.
That is, the most liquid assets are those that we can use at any time.
M0 is an absolutely liquid aggregate. Cash can be exchanged at any time.
M1 is a highly liquid asset. With the help of M1, you can make almost all payment transactions and easily transfer to the most liquid asset M0.
M2 liquidity is lower. Funds held in time deposits cannot be directly transferred from one person to another and used for transactions.
M3 is the least liquid asset. It is used for accumulation purposes, not circulation.
Main conclusions
- The money supply consists of M0, M1, M2, M3.
- The values of the aggregates are used to determine the level of provision of the state with funds.
- Equilibrium in the economy occurs when M2 is greater than M1, and is strengthened when the sum of M2 and M3 becomes greater than M1.
- M0, M1, M2, M3 differ in the degree of liquidity (M0 - absolute liquidity, M3 - the lowest liquidity of assets).
Changes in the movement of money on a certain date and for a certain period in financial statistics, monetary aggregates M0, M1, M2, M3, M4 are used.
The M0 unit includes cash in circulation: banknotes, metal coins, treasury notes (in some countries). Metal coins, which make up an insignificant share of cash (2-3% in developed countries), enable individuals to make small transactions. Usually these coins are minted from cheap metals. The real value of the coins is much lower than the face value in order to prevent them from being melted down for a profitable sale in the form of ingots. Treasury notes are paper money issued by the Treasury. The prevailing role belongs to banknotes.
The M1 aggregate consists of the M0 aggregate and the funds on current bank accounts. Account funds can be used for non-cash payments, through transformation into cash and without transfer to other accounts. For settlements using the funds in these accounts, their owners issue payment orders (the predominant form of settlement in the Russian economy) or checks and letters of credit. It is the M1 unit that services operations for the implementation of gross domestic product (GDP), distribution and redistribution of national income, accumulation and consumption.
Aggregate M2 contains aggregate M1, term and savings deposits in commercial banks, as well as short-term government securities. The latter do not function as a medium of exchange, but can turn into cash or checking accounts. Savings deposits in commercial banks are withdrawn at any time and turn into cash. Term deposits are available to the depositor only after a certain period of time and, therefore, have less liquidity than savings deposits.
Aggregate M3 contains aggregate M2, savings deposits in specialized credit institutions, as well as securities circulating on the money market, including commercial bills issued by enterprises. This part of the funds invested in securities is not created by the banking system, but is under its control, since the transformation of a bill into a means of payment requires, as a rule, acceptance by the bank, i.e. guarantees of its payment by the bank in case of insolvency of the issuer.
Aggregate M4 is equal to aggregate M3 plus various forms of deposits in credit institutions.
A balance is necessary between the aggregates, otherwise there is a violation monetary circulation. Practice suggests that equilibrium occurs when M2 > M1; it strengthens at M2 + M3 > M1. In this case, money capital is transferred from cash to non-cash circulation. If this ratio between aggregates is violated, complications begin in monetary circulation: lack of banknotes, price increases, etc.
In Russia, aggregates M0, M1, M2 M3 are used to calculate the total money supply. The monetary aggregates include; M0 - cash in circulation; M1, except for M0 - funds of enterprises on settlement, current, special accounts in banks, deposits of the population in savings banks on demand, funds of insurance companies; M2; equals M1 plus time deposits of the population in savings banks, including compensation; M3 consists of M2 and certificates, government bonds.
Sincerely, Young Analyst
To analyze changes in the movement of money on a specific date and for
a certain period in financial statistics began to be used first in
economically developed countries, and then in our country (meaning Russia. ed.) monetary aggregates
M0, M1, M2, M3, M4.
The M0 aggregate includes cash in circulation: banknotes,
metal coins, treasury notes (in some countries).
Metal coins constituting a small proportion of cash (in
developed countries 2-3%), enable individuals to make small transactions.
Usually these coins are minted from cheap metals. The real value of the coin
significantly lower than the nominal value in order to prevent them from being melted down for
profitable sale in the form of bullion.
Treasury notes - paper money, the emissions of which are carried out
Treasury. Paper money is now functioning in underdeveloped countries.
For example, in the Republic of Djibouti, treasury notes are in circulation
(denominations of 500, 5000, 1000 francs) and coins whose emissions
carried out by the Treasury; treasury notes and coins are functioning and
in the Kingdom of Tonga.
The prevailing role belongs to banknotes.
The M1 aggregate consists of the M0 aggregate and the funds on current bank accounts.
Account funds can be used for non-cash payments,
through transformation into cash and without transfer to other accounts. For
settlements using the funds on these accounts, their owners issue payment
instructions (the predominant form of payment in the Russian economy) or checks and
letters of credit. It is the M1 unit that services operations for the implementation of the gross
domestic product (GDP), distribution and redistribution of the national
income, savings and consumption.
Aggregate M2 contains aggregate M1, time and savings deposits in
commercial banks, as well as short-term government securities.
The latter do not function as a medium of exchange, but they can
turn into cash or checking accounts. Savings deposits in
commercial banks are withdrawn at any time and turn into cash
Term deposits are available to the depositor only after a certain period
and therefore have less liquidity than savings
deposits. In the US, the M2 unit includes:
M1 - 23% (including cash 7% and checking deposits 19%),
savings and time deposits - 74%.
Aggregate M3 contains aggregate M2, savings deposits in
specialized credit institutions, as well as securities,
circulating in the money market, including commercial bills,
issued by enterprises. This part of the funds invested in securities
is not created by the banking system, but is under its control, because
the transformation of a bill into a means of payment requires, as a rule, the acceptance of a bank,
those. guarantees of its payment by the bank in case of insolvency of the issuer.
Aggregate M4 is equal to aggregate M3 plus various forms of deposits in credit
institutions.
Equilibrium is necessary between aggregates, otherwise
violation of money circulation. Practice shows that balance
occurs at М2 > М1; it strengthens at M2 + M3 > M1.
In this case, money capital is transferred from cash circulation to
cashless. In case of violation of such a ratio between aggregates in monetary
circulation, complications begin: lack of banknotes, rising prices, etc.
Countries use different amounts to determine the money supply.
aggregates (for example, the USA - four, France - two). In Russia for calculation
of the total money supply, the aggregates М0, М1, М2 М3 are used
aggregates include; M0 - cash in circulation; M1, except M0 -
funds of enterprises on settlement, current, special accounts in banks,
deposits of the population in savings banks on demand, funds
insurance companies; M2; equals M1 plus time deposits of the population in
savings banks, including compensation; M3 consists of M2 and
certificates, government bonds.
Money is something that everyone (or almost everyone) lacks - people, businesses and countries. But money is different. In your wallet, there are both banknotes (sometimes rubles, dollars or even yuan) and bank (credit) cards nearby. And both are money.
But we all know that you can pay with a banknote everywhere (or almost everywhere), and for a bank card you need either an ATM or a terminal. That is, the availability (liquidity) of this money is different. However, it's all money supply. What is money supply? This is exactly what unites your (and not only your) cash and non-cash funds.
The example of bank cards and cash denominations clearly demonstrates that money differs significantly in its availability. Therefore, for financial and economic analysis they are subdivided into aggregates of the money supply.
Types of monetary aggregates are commonly referred to as M0, M1, M2, M3 (sometimes also M4).
Consider what is a monetary aggregate. In simple words, monetary aggregates are a set of Money one "sort". For example, M0 is an aggregate that includes cash in circulation. That is, it is "cash" in the wallets of people, in banks, cash desks of shops and enterprises. There is not so much of such money in the general money supply. In Russia, this is approximately 20-25% of the total mass, and in Europe and the USA - less than 10%.
Consider how the money supply and monetary aggregates affect the stability of the entire financial system. So what is M0-M4:
- M0, as already noted, is "cash";
- M1 includes "cash" and "non-cash" ( bank cards), deposits in banks (“demand”), account balances of any individuals and legal entities, as well as checks;
- M2 includes M1 and also fixed-term deposits of citizens and legal entities;
- M3 is M2 plus savings deposits of all persons and all types, as well as certificates of banks and organizations, government bonds;
- M4 is not always used and includes "cash" plus the amount of loans issued by banks plus government debt.
Read also: The full cost of the loan: what is it, how to calculate
As you can see, each subsequent unit includes the previous one. Why is this necessary and what does the share of each aggregate in the structure of the money supply mean?
How money supply and its aggregates are used in economic analysis
In ancient times, almost the entire money supply had the character of M0 - "cash" (coins, and later banknotes). Even 150 years ago it was about 90% of all money. Gradually this share decreased. Already 100 years ago, this share had decreased to one third. These changes stimulated economic growth. Indeed, money “under the mattress” cannot be loaned to purchase raw materials or build a new plant. On the other hand, an increase in the share of "cash" indicates a distrust of people and entrepreneurs in the financial system.
Let's see how the share of "cash" (M0) in Russia has changed over the past 15 years. This share in relation to M2 in the period from 2002 to 2017 steadily decreased from more than 36% to 20%. But, it is noteworthy that there were two exceptions - 2009 and 2015, when this share increased slightly - by 0.5% in 2009 and 0.1% in 2015. We all remember well what kind of processes took place in the economy and the financial sector during this period.
The share of cash in Russia is still noticeably higher than in the developed countries of Europe and the USA, which is primarily due to the underdevelopment of the system of non-cash payments, a significant share of the "gray" and shadow sectors of the economy, which mainly work with " cash” and a certain level of distrust of the population in the banking system. After all, there is still a large proportion of workers who, having received a salary on a bank card, run to an ATM for cashing out.
22.10.2018 09:16
The concept of money supply
The money supply is the volume of the state stock of money in ruble equivalent, serves the cash flows that form the money circulation.
Money supply is a set of money circulating in the country's economy in a certain period of time, both in cash and non-cash, in current and savings accounts. In other words, it is the total amount of money in circulation in a certain period of time. Thus, non-cash and cash money are included in the total money supply.
Cash in hand includes:
- small coin;
- paper money (treasury notes, banknotes);
- credit funds (checks, bills of exchange).
Non-cash money supply is taken into account:
- on debit and credit plastic cards;
- on deposits and deposits;
- on settlement, current accounts;
- in electronic money.
States showing favorable economic situation, have predominantly non-cash cash flows. The amount of cash in circulation by citizens and other participants in the national market is no more than 5% of the total money supply. On the territory of states with a banking system of a low degree of reliability, underdeveloped market relations, the ratio of non-cash and cash money supply is fundamentally different. The more cash on hand, the lower the level of the market economy.
Dynamics of the share of cash in the total money supply of Russia
| On the date | The share of cash in the money supply (M2) |
|---|---|
| 01.01.2009 | 29% |
| 01.01.2010 | 26% |
| 01.01.2011 | 25% |
| 01.01.2012 | 25% |
| 01.01.2013 | 24% |
| 01.01.2014 | 22% |
| 01.01.2015 | 23% |
| 01.01.2016 | 21% |
| 01.01.2017 | 20% |
| 01.01.2018 | 20% |
| 01.01.2019 | 20% |
| 01.04.2019 | 19% |
Despite the fact that the structure of the monetary volume has changed over last years, and the cash ratio decreased by 10%, the shadow economy in the Russian Federation is flourishing, since the level of cash is not yet small enough. The unwillingness of the population to place free capital in bank accounts indicates its distrust in the banking structure in particular, and in the credit and financial policy of the state in general.
The structure of the money supply
In the structure of the money supply, one can single out the active part, which is formed by real money directly involved in economic turnover, and the passive part, which is formed by money in accounts that can potentially be settlement funds. However, not all components of the passive part can be used as a means of payment.
Monetary aggregates М0, М1, М2, М3, М4
The principle of building the money supply is based on the decrease in the liquidity of the assets included in its composition. The composition and structure of the cash supply characterize monetary aggregates. The hierarchical structure of monetary aggregates assumes that each subsequent aggregate includes the previous one. From country to country, there may be differences in the definition and classification of each aggregate.
Monetary Aggregates- types of money and funds that differ in their level of liquidity (the ability to quickly turn into cash), an indicator of the structure of the money supply. They are meters of the money supply, depending on the type of account in which they are located.
The Central Bank of the Russian Federation calculates monetary aggregates М0, М1, М2, М3.
Monetary aggregate М0- this is cash circulating in the economy (paper banknotes and metal coins), which is the most liquid part of the money supply.
Monetary aggregate M1= M0 (cash) + other cash equivalents that can be easily converted into cash (cheques, funds of the population on demand deposits, funds on settlement, current and other demand accounts of non-financial and financial organizations (except for credit ones)), expressed in national currency.
Monetary aggregate M2= M1 + short-term deposits (term deposits, funds in the accounts of time deposits attracted from the population, non-financial and financial organizations (except credit)) in the national currency and some money market funds. M2 money supply is money supply in the national definition of Russia.
Monetary aggregate M3= M2 + long-term deposits, government bonds, treasury savings bonds, certificates of deposit.
Monetary aggregate M4 calculated in some countries such as the UK. Monetary aggregate M4 = M3 + all monetary components and monetary surrogates with lower liquidity, portfolio of government securities held by non-bank holders.
Narrow and wide money
tight money- a term that defines the most liquid instruments. Most often characterized by aggregates M0 or M1, depending on the country.
broad money- a term that defines the totality of assets that can be used to make payments. The definition of broad money also varies from country to country, but in general, these are instruments that can be accessed in more than 24 hours.
The volume of money supply in Russia by years
Dynamics of the money supply (M2) at the beginning of 2008 - 2019, Q2 2019 according to the Bank of Russia (CBR)
| Period | Money supply (M2), billion rubles | including: |
|
|---|---|---|---|
| Cash (M0) | Non-cash funds |
||
| 2008 | 12869,0 | 3 702,2 | 9166,7 |
| 2009 | 12 975,9 | 3 794,8 | 9 181,1 |
| 2010 | 15 267,6 | 4 038,1 | 11 229,5 |
| 2011 | 20 011,9 | 5 062,7 | 14 949,1 |
| 2012 | 24 204,8 | 5 938,6 | 18 266,2 |
| 2013 | 27 164,6 | 6 430,1 | 20 734,6 |
| 2014 | 31 155,6 | 6 985,6 | 24 170,0 |
| 2015 | 31 615,7 | 7 171,5 | 24 444,2 |
| 2016 | 35 179,7 | 7 239,1 | 27 940,6 |
| 2017 | 38 418,0 | 7 714,8 | 30 703,2 |
| 2018 | 42 442,2 | 8 446,0 | 33 996,2 |
| 2019 | 47 109,3 | 9 339,0 | 37 770,3 |
| 01.04.2019 | 46 140,0 | 8 980,6 | 37 159,5 |
Dynamics of monetary aggregates M0, M1, M2 at the beginning of 2011 - 2019, Q2 2019 according to the Bank of Russia (CBR)
| Period | Cash in circulation outside the banking system (monetary aggregate M0) | Transferable deposits | Monetary aggregate M1 | Other deposits included in the M2 monetary aggregate | Money supply in the national definition (monetary aggregate M2) |
|---|---|---|---|---|---|
| 1 | 2 | 3=1+2 | 4 | 5=3+4 |
|
| 2011 | 5 062,7 | 5 797,1 | 10 859,9 | 9 152,0 | 20 011,9 |
| 2012 | 5 938,6 | 6 818,3 | 12 756,9 | 11 447,9 | 24 204,8 |
| 2013 | 6 430,1 | 7 264,0 | 13 694,0 | 13 470,6 | 27 164,6 |
| 2014 | 6 985,6 | 8 526,3 | 15 511,9 | 15 643,7 | 31 155,6 |
| 2015 | 7 171,5 | 8 170,0 | 15 341,4 | 16 274,3 | 31 615,7 |
| 2016 | 7 239,1 | 9 276,4 | 16 515,6 | 18 664,1 | 35 179,7 |
| 2017 | 7 714,8 | 9 927,6 | 17 642,4 | 20 775,6 | 38 418,0 |
| 2018 | 8 446,0 | 11 062,8 | 19 508,9 | 22 933,3 | 42 442,2 |
| 2019 | 9 339,0 | 12 285,1 | 21 624,1 | 25 485,2 | 47 109,3 |
| 01.04.2019 | 8 980,6 | 11 830,1 | 20 810,6 | 25 329,4 | 46 140,0 |
Analyzing the dynamics of the money supply, it is possible to determine the economic state of the country. From 2008 to 2019, there has been an average increase in the money supply by 13%, and in the crisis year of 2008 its value was close to 1%, while in 2011 it was 31%. During 2013-2018 the growth rate decreased from 12% to 2.2%, which indicates that the Central Bank has taken measures to reduce inflation. The flip side may be evidence that a crisis is growing in the country.
The money supply of Russia in 2018 and on April 1, 2019
The statistics of the Central Bank of the Russian Federation states that at the end of 2018, the aggregate M2 = 47109.3 billion rubles, which is higher than the value at the beginning of the year by 6667.1 billion rubles. or 11%. In the first quarter of 2019, the money supply decreased by 2.1% compared to the beginning of the year. However, given the annual increase in M2, we can expect it to increase in 2019 as well.
The growth dynamics of cash outside the banking system in 2018 indicates that they have increased by 10.57%. For the first quarter of 2019, the volume of cash (M0) decreased from 9,339 billion rubles by 3.8% (in monetary terms, by 358.4 billion rubles) and amounted to 8,980.6 billion rubles.
Bank deposits of the population in 2018 also showed an increase - 10.87% and amounted to 20,643 billion rubles. As of April 1 of this year, the volume of funds on such deposits decreased slightly - by 0.7% and amounted to 20,857 billion rubles.
Statistical data indicate that in the amount of money, a fairly large percentage is still occupied by cash (M0) that is outside the banking system. Despite the fact that the share of cash in the money supply continues to decline, citizens of the Russian Federation continue to spend a lot of cash on purchases, neglecting such payment instruments as plastic bank cards. At the same time, the increase in deposit funds compared to last year is a positive indicator that indicates the successful monetary policy of the state-credit apparatus.
Monetization ratio
The monetization coefficient is an indicator that characterizes the economy's need for money supply. In a state with a positive economic condition and a minimum percentage of inflation, this figure is at least 50%. In the Russian Federation, the level of monetization for 2018 amounted to 43.2%, which indicates the insufficient development of the market economy.
Money supply in different countries
Dynamics of money supply M2 2008 - 2019 according to the websites of the National Banks, in national currencies
| Money supply M2, billion national currency |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 |
|
| USA, USD | 8265,30 | 8550,50 | 8822,50 | 9692,30 | 10500,10 | 11067,30 | 11728,00 | 12416,10 | 13292,60 | 13937,30 | 14473,00 |
| Great Britain, GBP | 1842,49 | 1906,96 | 2092,59 | 2047,98 | 2058,13 | 2088,29 | 2086,85 | 2134,84 | 2284,26 | 2347,84 | 2419,58 |
| Germany, EUR | 1859,90 | 1849,30 | 1930,50 | 2062,50 | 2220,40 | 2285,20 | 2399,20 | 2605,80 | 2755,90 | 2880,60 | 3019,30 |
| France, EUR | 1357,77 | 1353,65 | 1456,29 | 1514,03 | 1600,46 | 1645,36 | 1707,73 | 1786,38 | 1880,62 | 2047,61 | 2161,91 |
| Japan JPY | 741700,0 | 764400,0 | 782300,0 | 806900,0 | 827700,0 | 862800,0 | 893100,0 | 920600,0 | 956300,0 | 990600,0 | 1014200,0 |
| Brazil, BRL | 1086,79 | 1185,87 | 1387,91 | 1649,90 | 1792,89 | 1985,47 | 2186,47 | 2334,14 | 2446,07 | 2581,70 | 2848,57 |
| India, INR | 11499,91 | 13557,57 | 16205,66 | 17296,53 | 18501,19 | 20296,91 | 22339,79 | 25149,05 | 20883,21 | 29891,20 | 34088,53 |
| China, CNY | 47516,66 | 60622,50 | 72585,18 | 85159,09 | 97414,88 | 110652,50 | 122837,48 | 139227,81 | 155006,70 | 169023,53 | 182674,42 |
| South Africa, ZAR | 1562,43 | 1589,34 | 1678,42 | 1798,93 | 1869,05 | 2049,69 | 2226,54 | 2441,53 | 2601,20 | 2806,03 | 2893,83 |
| Russia, RUB | 12 975,9 | 15 267,6 | 20 011,9 | 24 204,8 | 27 164,6 | 31 155,6 | 31 615,7 | 35 179,7 | 38 418,0 | 42 442,2 | 47 109,3 |
Dynamics of money supply M2 2008 - 2019 according to the websites of the National Banks, recalculated in US dollars at official rates
| A country | Money supply М2, billion US dollars |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 |
|
| USA | 8265,30 | 8550,50 | 8822,50 | 9692,30 | 10500,10 | 11067,30 | 11728,00 | 12416,10 | 13292,60 | 13937,30 | 14473,00 |
| Great Britain | 995,94 | 1214,62 | 1350,06 | 1279,99 | 1294,42 | 1338,65 | 1264,75 | 1395,32 | 1692,04 | 1820,03 | 1819,23 |
| Germany | 2734,05 | 2570,53 | 2567,57 | 2866,88 | 2864,32 | 3039,32 | 3190,94 | 2892,44 | 3059,05 | 3255,08 | 3562,77 |
| France | 1995,91 | 1881,57 | 1936,87 | 2104,49 | 2064,59 | 2188,33 | 2271,27 | 1982,88 | 2087,49 | 2313,80 | 2551,05 |
| Japan | 7173,81 | 8159,69 | 8912,05 | 10124,22 | 10369,58 | 8840,16 | 8446,19 | 7605,12 | 8798,42 | 8832,81 | 9191,59 |
| Brazil | 465,03 | 681,06 | 832,98 | 879,57 | 877,36 | 847,55 | 823,16 | 597,76 | 750,53 | 780,44 | 735,15 |
| India | 237,36 | 290,44 | 361,65 | 324,72 | 337,75 | 327,91 | 352,74 | 379,17 | 307,31 | 467,58 | 488,96 |
| China | 6967,25 | 8875,92 | 10997,75 | 13538,81 | 15636,42 | 18289,67 | 19812,50 | 21485,77 | 22303,12 | 25963,68 | 26551,51 |
| South Africa | 167,94 | 215,59 | 253,45 | 221,22 | 220,31 | 195,82 | 192,41 | 156,77 | 190,87 | 228,24 | 200,80 |
| Russia | 437,00 | 453,42 | 599,30 | 680,83 | 814,58 | 882,19 | 535,78 | 449,28 | 600,64 | 696,43 | 646,20 |
The money supply of all countries tends to increase, but no country is experiencing such growth as China. Since 2008, the volume of M2 in this country has increased by 3.8 times, far ahead of the United States in absolute terms. The US money supply over the same period increased by $6,206.7 billion, or 1.75 times.
Money supply control
At the legislative level, the regulation of the money supply (non-cash and cash) is carried out by the Central Bank of the Russian Federation.
Directions of the policy of control over the money supply:
- conducting an effective monetary policy;
- public debt management;
- implementation of tax policy;
- formation of the financial market;
- control over the money supply in the course of monetary policy.
The tools for regulating the money supply include the following:
Open market operations as the main instrument of regulation. It is applied through the influence on the volume of resources of commercial banks by buying and selling treasury bills, government bonds and other securities with a reverse transaction after a certain time. By purchasing such securities, commercial banks reduce the amount of funds that they can use to lend to customers, which ultimately leads to an increase in loan interest. When reselling securities to the Central Bank, banks attract additional resources.
Motto operations consisting in buying and selling by the Central Bank foreign exchange in order to maintain the exchange rate of the national currency, prevent its sharp fluctuations and counteract the speculative moods of market participants.
Deposit operations of the Bank of Russia used to manage excess liquidity of commercial banks. These operations allow the Central Bank to promptly attract free funds of banks into deposits, quickly neutralizing their possible pressure on currency market, thereby preventing the depreciation of the national currency and the growth of inflation.
Policy discount rate(discount policy), consisting in the regulation of interest on loans attracted commercial banks from the Bank of Russia. The increase in the rate on accounting and lending operations is intended to limit the rate of inflation growth by "compressing" the money supply in circulation.
Change in the required reserve ratio set by the Central Bank. Its increase leads to the fact that a significant part of bank funds is "blocked" in the accounts of the Central Bank, and therefore cannot be used by banks to issue loans. As a result, the money supply in circulation is reduced.
The set of measures associated with the withdrawal by the Central Bank of excess free cash from the economy is called money sterilization. This is done due to the fact that such an excess of money can cause inflation and other negative processes in the country's economy.