M stands for money

This is the FRED Blog's 1000th post! So, today's topic is brought to you by the letter M, which stands for 1000 in Roman numerals. M also stands for money and is used to label various technical measures of money in the economy.

First, a definition: Money is a good that's generally accepted as 1) a store of value, 2) a means of exchange, and 3) a unit of account. Various goods have been considered money throughout history, most prominently precious metals. In this era of fiat money, money is harder to define and measure. Read more on what makes money, money.

Definitions differ from country to country, due to variations in their financial systems. So, today we concentrate on the United States, where the convention is to number the money definitions from the narrowest to the broadest, from M0 to M3:

• M0 is cash, a.k.a. currency in circulation in the form of bills and coins. (It's labeled "Currency Component of M1" in the graph.) Currency in Federal Reserve and bank vaults doesn't count.
• M1 adds to M0 all highly liquid bank accounts, such as checking accounts. Since 2020, M1 has also included savings accounts, which caused a jump in M1.
• M2 adds to M1 less-liquid small "time deposits" such as CDs and money market accounts for individuals.
• M3adds to M2 large and institutional time deposits. The Federal Reserve discontinued collecting the necessary data for M3 in 2006, when the cost outweighed the policy relevance.

All these concepts, andtherearemore, can be thought of as money. Yet, their statistics vary widely, as does their policy relevance. Check back with the FRED Blog whenever you need data and definitions.

How this graph was created: Search FRED for "currency" and take the component of M1 series, to be consistent with the units of the rest of the graph. Click on "Edit Graph, open the "Add Line" tab, and search for "M1," "M2," and "M3." Adjust the sample period to start on 1959-01-01.

Suggested by Christian Zimmermann.