In life, most people know little about M0, M1, and

M2. We usually hear reports about how the national economy will be affected when M1 is greater than M2, and how the stock market will be affected when M2 is greater than M1. So, what do the three mysterious numbers M0, M1, and M2 each represent? What?

M0, M1, and M2 are categories of money supply. People generally divide the money supply into different levels for measurement, analysis and regulation based on the size of liquidity. In practice, different countries have different definitions of M0, M1, and M2, but they are all divided according to the size of liquidity. M0 has the strongest liquidity, followed by M1, and M2 has the worst liquidity.

In the modern economy, each country has only one bank that can print money, and that is the central bank. The central bank lends the printed money to commercial banks, and the commercial banks then lend the money to companies or individuals to collect interest. The central bank then withdraws currency from commercial banks, burns part of the cash, and prints some new banknotes to maintain the desired total number of cash. Most loans are made in large amounts using bills or electronically and do not have corresponding cash. The total amount will be much higher than the amount of M0, which is narrow money M1 and broad money M2. For example, checks and demand deposits count as M1, and M2 includes M1, plus institutional deposits.

According to public information from the National Bureau of Statistics, my country’s system uses M0, M1, and M2 as the framework.

M0=cash in circulation;

M1=narrow money supply Mdemand deposits of non-financial companies;

M2=broad money supply M1+non-financial companies Time deposits + savings deposits + other deposits of financial companies.

In life, M0 is closely related to consumption. Its high value proves that people are well-off and wealthy, and this possibility is higher when they have no worries about food and clothing; M1 reflects changes in the capital tightness of residents and enterprises, and is It is a leading indicator of economic cycle fluctuations; while M2 liquidity is weak, it reflects changes in total social demand and future inflationary pressures. The money supply usually referred to mainly refers to M2. There are two channels for currency injection, one is the injection of foreign exchange accounts, and the other is the injection through bank credit. The faster their launch grows, the greater the growth rate of M2. …

For reference.