M4 money supply

M4 money supply

With reference to the UK economy, M4 is a definition of the money supply denoting "Broad Money", a wide definition of the volume of sterling in the economy, encompassing notes and coin as well as money held in bank accounts. The measure is equivalent to the US "M3" (see Money supply for US definitions).

M4 = M0 + UK residents' bank deposits + deposits made by the private sector

Where M0 ("Narrow Money") denotes the total of notes and coin in circulation in the economy plus commercial banks' deposits at the Bank of England.

There are several different definitions of money supply to reflect the differing stores of money. Due to the nature of bank deposits, especially time-restricted savings account deposits, the M4 represents the most illiquid measure of money. M0, by contrast, is the most liquid measure of the money supply.

See also

*Money supply
* [http://www.bankofengland.co.uk/ The Bank of England website]


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