The amount of money in the economy: cash and readily spendable deposits (M1) plus savings and term deposits (M2, or M3 in Australia).
Money supply measures grow when banks lend and when central banks buy assets. The narrow measures cover what can be spent immediately; broad measures add savings.
Why it matters
Very rapid money growth, as in 2020–21, has preceded higher inflation; shrinking money supply signals tight conditions. The link is loose over short periods, which is why central banks now target interest rates rather than money.
