M3 - Total Money

Note that since 2006, the Federal Reserve has stopped publishing M3 values.

M3, in terms of the money supply, represents the broadest and most inclusive measure of money within an economy. M3 includes not only the components of M2 but also additional financial assets that are even less liquid and include larger institutional holdings. M3 provides a comprehensive view of the total money supply, including various forms of savings, investment vehicles, and institutional holdings.

Key components of M3 typically include:

• M2 Components: M3 includes all the components of M2, which consist of physical currency (coins and paper money), demand deposits (checking accounts), other checkable deposits, savings accounts, time deposits (certificates of deposit or CDs), money market mutual funds (MMMFs), retail money market deposits, and small time deposits.

• Large Time Deposits: M3 incorporates larger time deposits and CDs, including those held by institutions, corporations, and government entities. These deposits are often sizable and may have longer maturities.

• Institutional Money Market Funds (IMMFs): M3 includes institutional money market funds, which are similar to MMMFs but cater to institutional investors, such as businesses, government agencies, and large organizations.

• Repurchase Agreements (Repos): Some versions of M3 include repurchase agreements (repos), which are short-term lending agreements typically used by financial institutions. Repos involve the sale and repurchase of securities and play a role in the interbank lending market.

• Large Liquid Assets: M3 may encompass certain large liquid assets held by financial institutions, such as banks and credit unions, that can be quickly converted into cash.

• Other Near-Money Assets: M3 can include additional near-money assets and financial instruments that are highly liquid but not readily used for transactions in the same way as M1 components.

M3 provides a comprehensive overview of the money supply's various forms, making it an essential tool for assessing the overall availability of money within an economy. However, it's important to note that the publication of M3 data by central banks, including the Federal Reserve in the United States, has become less common, and in some cases, M3 data may no longer be publicly available. As a result, M2 has become the most commonly used measure for analyzing and understanding the money supply in many countries.

---

Be sure to submit your email address to receive product and service updates from OpenBullion.