Money (M0)= cash in circulation, that is, cash circulating outside the banking system. Narrow money (M 1)=(M0) cash in circulation+cheque deposit (and transfer credit card deposit); Broad money (M2)=M 1+ savings deposits (including current and fixed savings deposits). M 1 year-on-year growth rate: last year it was set as X 1, and this year it was set as X2, with growth rate = (x2-x 1)/x 1+000%, chain growth rate: Y 1 last month, and Y2 this month, with growth rate =

I basic concepts of M0, M 1 and M2:

M0, M 1 and M2 are three important indicators reflecting the money supply. The currency grades in China are as follows (according to the standard of currency liquidity):

● M0 (currency) = cash in circulation, that is, cash circulating outside the banking system.

● M 1 (narrow currency) =M0+ company demand deposit.

● M2 (broad money) =M 1+ quasi-money (resident savings+time deposits+other deposits)

In addition, according to the continuous innovation of financial instruments, m3 is set as:

M3=M2+ financial bonds+commercial paper+large negotiable certificates of deposit, etc.

(Money in economics usually refers to M2)

Second, the significance

● M0: It is closely related to consumption, and high value means that people have money.

● M 1: it reflects the actual purchasing power in the economy, represents the change of the financial tension of residents and enterprises, and is the leading indicator of economic cycle fluctuation. Liquidity is second only to M0.

● M2: It reflects both the actual purchasing power and the potential purchasing power; The weakness of liquidity reflects the change of total social demand and the pressure of inflation in the future.

Generally speaking, we can reveal the macro-economic operation by changing the growth rate of M 1 and M2:

_ m 1 grows rapidly, and the consumption and terminal markets become active;

_ If M2 develops rapidly, the investment and intermediary market will be active;

_ If M 1 is too high and M2 is too low, it means that there is strong demand, insufficient investment and inflation risk;

If M2 is too high and M 1 is too low, it means that investment is overheated, demand is not strong, and there is a risk of asset bubble.