Banking In the United States

Standard Definitions of Money

• Monetary Base (M0): Direct liabilities of the central bank
• Currency in circulation + Bank Reserves
• M1:
• Currency in circulation + Traveler's Checks + Checking accounts
• M2:
• M1 + Savings accounts + Money Market Accounts + Small Time Deposits
• M3:
• M2 + Large Time Deposits + Eurodollars

• Once those reserves enter the banking sector, they are used as the basis for creating loans. These loans make up the rest of the money supply. The fed can’t control this, but can influence it

• MB

• M3

• M2

• M1

• The Federal Reserve can perfectly control the monetary base (cash + bank reserves)

Money Supply in the US (in Billions)

• MB

• M1

• M3

• M2

• Cash