Money supply refers to a country's money stock serving the social and economic operation at a certain point in time, which consists of two parts: deposit currency and cash currency supplied by financial institutions including the central bank.
Liquidity means that an asset can be turned into cash or commodity at any time without any loss to the holder. The degree of currency liquidity represents the monthly turnover of currency in circulation, and the resulting purchasing power of goods and its influence on the whole social and economic activities are also different.
In real life, except cash, bank deposits and various securities have certain liquidity. According to the needs of macro-monitoring and macro-control, and the size of liquidity, the central bank generally divides the supply of goods into the following three levels: cash in circulation M0 cash (the sum of cash held by units and cash held by residents) M0 is closely related to consumption, and its high value proves that ordinary people are well-off and rich.
Narrow money supply M 1M0+ demand deposits
M, which reflects the tightness change of residents' and enterprises' funds, is an indicator of current economic cycle fluctuation, and its liquidity is second only to M0.
Broad money supply M2M+ household savings+customer deposits of securities companies+corporate time deposits.
M2 is weak in liquidity and can be converted into cash in a certain period of time, which is a potential purchasing power, reflecting the changes in the future total social demand and the pressure of inflation. Money supply in people's daily life mainly refers to M2.
At present, China's money supply mainly comes from two channels: foreign exchange and bank credit. The faster the money supply grows, the greater the growth rate of M2.
Through the contents of M0, M 1 and M2, we can draw the following basic conclusions!
M0 goes further:
It shows that residents have increased cash on hand, residents are rich, consumption is active, and the economy tends to rise.
Ml becomes higher:
It shows that enterprises actively invest in production, more funds flow into production and trade, and the economy tends to rise.
M2 is higher: because it contains time deposits, the longer the time of time deposits, the less funds will flow in the market, resulting in lower transactions and consumption, and the economic forecast tends to decline. Therefore, the economic trend is not easy to judge and needs to be analyzed in combination with other factors.
When the growth rate of MI is greater than M2, it means that the growth rate of demand deposits of enterprises is greater than that of time deposits, which means that enterprises invest more money in production and trading to obtain more benefits, and market transactions are active. This shows that the economy is expanding rapidly, and other types of assets other than demand deposits have higher returns. In this case, investors will soon use their time deposits and savings deposits for investment, and there is sufficient supply of funds in the market, which will put the commodity and labor markets under the pressure of rising prices.
When the growth rate of M2 is greater than that of MI, it means that the time deposits of enterprises are greater than the demand deposits, indicating that there are fewer profit opportunities or income in the market, and enterprises and residents are more willing to deposit money in banks to obtain stable income, thus the funds gradually precipitate and the economic growth slows down.
How to view money supply data?
Announcement time: the last month will be announced after the 5th day of each month.
Address: China People's Bank.
People's Bank of China issued new regulations.