M1, M2, M3 and M4 in finance are all divided into monetary levels M= cash in circulation M1=M+ revolving credit line of personal credit card+demand deposit of bank debit card+balance of bank acceptance bill+demand deposit of enterprise drawable cheque.

M2=M1+ personal demand deposits under non-bank cards+institutional group deposits+rural deposits; M3=M2+ enterprise time deposits+resident RMB time savings deposits+other deposits (trust deposits, entrusted deposits, margin deposits and extra-budgetary deposits)+foreign currency (equivalent to RMB) deposits.

M4=M3+ money market fund share X repurchase agreement of non-bank financial institutions+short-term government and financial bonds held by non-bank enterprises+housing provident fund deposits.

It has two meanings for the central bank to divide the levels of money supply according to the liquidity standard:

On the one hand, it provides a chart of money supply structure, which is conducive to providing a clear chart of money supply structure for the central bank's macro-financial decision-making, helping to grasp different money operation situations and take different measures to regulate accordingly.

on the other hand, analyzing the dynamic changes of the economy, this method of dividing money levels, is helpful for the central bank to analyze the dynamic changes of the whole economy. Each level of money supply has specific economic activities and commodity movements corresponding to it. By observing the changes of money supply at all levels, the central bank can grasp the situation of economic activities and analyze and predict its changing trend.