Also known as money supply. That is, the total amount of money circulating in a country is the amount of money held by the non-bank public except the central government or the Ministry of Finance, the central bank or commercial banks at a certain moment. It is the concept of stock, not the concept of flow. That is, it is a time variable, not a time variable. Money supply is divided into narrow sense and broad sense. In a narrow sense, it consists of banknotes, coins and demand deposits in circulation, and bank demand deposits are an important part of money supply. Broadly speaking, money supply also includes time deposits of commercial banks, deposits of savings and loan associations and mutual savings banks, and even cash liquidity assets such as savings bonds, certificates of deposit and short-term government bonds. Usually, each country divides its currency into different currency levels according to its liquidity, which is the basis for measuring and managing its currency. Because different levels of money have different effects on the national economy; The total amount of money supply in a country affects commodity prices, employment and economic activities, as well as the value of money itself. The change of money supply is caused by the behavior of financial institutions such as the central bank and commercial banks. Generally speaking, money is issued by the central bank, which monopolizes the right to issue money. The currency it issues has unlimited solvency and can be used indefinitely in all transactions. Demand deposits of commercial banks account for the vast majority of the money supply, including original deposits and derivative deposits. Original deposit is the cash deposit of individual residents and enterprises in commercial banks, which only turns cash into demand deposit and will not cause changes in the total money supply. Derivative deposits are deposits created by commercial banks through loans, investments and other asset businesses, which increase the total money supply. The central bank affects the creation of deposit currency by stipulating the deposit reserve ratio. Money supply is not only an important monetary theory issue, but also a major practical issue involving monetary regulation and management policies. All countries in the world attach great importance to money supply. According to the definition, money supply can be divided into narrow sense and broad sense. In a narrow sense, money supply refers to the cash held by the people plus writable deposits. Usually, the money supply in this definition is called m1; Money supply in a broad sense refers to M 1 plus time deposit, which is also the common M2.

Due to different national conditions, the definition of money supply is different, such as M3 money supply in Germany and M4 money supply in Britain by M0. As far as Taiwan Province Province is concerned, M 1 can be divided into M 1a and M 1b, as follows:

M 1a = cash held by the public+checking deposit+demand deposit.

M 1b = m 1a+ current savings deposit

Basically, the larger the Arabic numerals attached to the letter "M", the lower the English alphabetical order, which means the wider the coverage.

If the money supply grows too fast, it means that the people have too much money. Assuming that the goods produced by society have not increased, "too much money chasing too few goods" will lead to inflation. In order to monitor the growth of money supply, countries will choose the money supply with the highest correlation with inflation for monitoring.

For example, the Bundesbank sets a target area for the growth rate of M3 money supply every year. When the money supply exceeds the target area, it means that the money supply is too high, indicating that the people hold too much money. In order to prevent the pressure of rising prices, the authorities will tighten monetary policy and reduce the money supply. On the contrary, if the growth rate of money supply is lower than the target area, people who want to borrow money for consumption or investment (money demanders) must pay higher interest as a price, because the supply of funds is insufficient, thus reducing their willingness to consume and invest and hindering economic growth. At this time, the authorities adopted a loose monetary policy to increase the money supply.

Money supply is the sum of all kinds of deposits and cash held by units and individual residents in the bank, and its changes reflect the changes of the central bank's monetary policy, which has great influence on the production and operation of enterprises, the operation of financial markets, especially the securities market, and the investment behavior of individual residents. According to the needs of macro-monitoring and macro-control, the central bank generally divides the money supply into different levels according to the liquidity. China's current monetary statistics system divides the money supply into three levels: (1) cash in circulation (M0), which refers to the sum of cash in hand of residents and cash in hand of units outside the banking system; (2) Narrow money supply (M 1) refers to M0 plus demand deposits of enterprises, institutions, organizations, military units, schools and other units in the bank; (3) Broad money supply (M2) refers to M 1 time deposits in banks by enterprises, institutions, organizations, military units, schools and other units, savings deposits of urban and rural residents in banks and securities customers. The difference between M2 and M 1, that is, the sum of the company's time deposits and individual savings deposits, is usually called quasi-currency.

The central bank can control the money market by increasing or decreasing the money supply, thus intervening in the economy. Changes in the money supply will affect interest rates. The central bank can adjust the credit supply and interest rate through the management of money supply, thus affecting the money demand and keeping it consistent with the money supply, thus further affecting the economic policy of the level of macroeconomic activities.

The current monetary statistics system divides the money supply into three levels. I won't repeat it if there is one on it:)