Narrow Money

AAA

DEFINITION of 'Narrow Money'

A category of money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank. In the United States narrow money is classified as M1 (M0 + demand accounts), while in the U.K. M0 is referenced as narrow money.

INVESTOPEDIA EXPLAINS 'Narrow Money'

The name comes from the fact that M1/M0 are the narrowest or most restrictive ideas of money that are the basis for the medium of exchange within the economy. This category of money is considered to be the most readily available for transactions and commerce.

RELATED TERMS
  1. M3

    A measure of money supply that includes M2 as well as large time ...
  2. M1

    A measure of the money supply that includes all physical money, ...
  3. M2

    A measure of money supply that includes cash and checking deposits ...
  4. Broad Money

    In economics, broad money refers to the most inclusive definition ...
  5. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  6. Money Supply

    The entire stock of currency and other liquid instruments in ...
Related Articles
  1. The Federal Reserve
    Economics

    The Federal Reserve

  2. How The U.S. Government Formulates Monetary ...
    Personal Finance

    How The U.S. Government Formulates Monetary ...

  3. What Are Central Banks?
    Personal Finance

    What Are Central Banks?

  4. What Is Money?
    Economics

    What Is Money?

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center