Broad Money and Narrow Money What is the definition of broad money vs. narrow money?

The narrow definition of money simply refers to cash.

The broad definition of money refers to wealth, so that money is confused with **, bonds, real estate, etc., then the basic characteristics of money cannot be defined in economic analysis. In fact, money, as a general equivalent, is a general representation of social wealth, but money is not equivalent to social wealth itself, it is only a part of social wealth.

1. Different definitions:

1.Broad Money:

It is an economic concept, corresponding to the narrow sense of money, a form or caliber of money supply, expressed in m2, and its calculation method is transaction money (m1, that is, the total amount of money in circulation in society plus demand deposits) and time deposits and savings deposits.

2 Narrow Money:

It is the symmetry of "Guangzen Tomb Hand Currency". The sum of cash in circulation and demand deposits of commercial banks.

Second, the characteristics are different:

1.Broad Money:

Since all kinds of fixed-term deposits can generally be withdrawn in advance and converted into real purchasing power, they can be counted as currency, which can more comprehensively reflect the state of currency circulation and facilitate the analysis and control of market financial activities.

The regulations of the first bank on these classification indicators are different in different countries, and the number of broad monetary classification indicators is also different in different periods of a country's economic and financial development.

2.Narrow Money:

Depositors can issue checks for transfer or circulation at any time, and have two functions: means of payment and means of circulation, and are the deposit currency in the narrow sense of money.

The main differences between broad money and narrow money are as follows:

1. Reflect the difference in purchasing power.

Narrow money reflects the real purchasing power in the economy;

Broad money reflects not only the actual purchasing power, but also the potential purchasing power.

2. The role is different.

The main role of broad money: to reflect the currency circulation situation more comprehensively, to facilitate the analysis and control of market financial activities;

The main role of narrow money: as a means of payment and circulation.

3. The calculation method is different.

Algorithms internationally:

Currency (M2) = M1 + Savings Deposit (including current and fixed savings deposits);

Narrow money (m1) = cash in circulation + check deposits (and transfer credit card deposits).

Algorithms in China:

m0 = cash in circulation.

Narrow money (m1) = m0 + bank demand deposit.

Broad money (m2) = m1 + time deposit + savings deposit + ** corporate customer margin.

Summary. Kiss <>

I'm glad to answer for you: The difference between broad money and narrow money is that broad money is also known as M2 money**, including cash, demand deposits, time deposits, savings deposits and other monetary instruments, narrow money is also known as M1 money**, only including cash and demand deposits in circulation, in short, broad money refers to all money that can be used to buy goods and services, while narrow money refers to the most circulating and commonly used form of money. <>

The difference between broad money and narrow money.

Tell Min to <> pro

I'm glad to answer for you: The difference between broad money and narrow money is that broad money is also known as M2 money**, including cash, demand deposits, time deposits, savings deposits and other monetary instruments, narrow money is also known as M1 money**, only including cash and demand deposits in circulation, simple friends, broad money refers to all money that can be used to buy goods and services, while narrow money refers to the most circulating and commonly used form of money. <>

Kiss <>

Broad-sense money includes narrow-sense money, as well as some less liquid forms of money, these less circulating forms of money may take time or procedures to convert into other forms of money, but they can still be used to purchase goods and services. <>