Narrow Money

What is 'Narrow Money'

Narrow money is 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.

BREAKING DOWN '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.

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RELATED FAQS
  1. Does M1 include foreign currency?

    Learn the definition of M1, as well as other categories of money supply in the United States. Learn how it may differ in ... Read Answer >>
  2. How much of the United States' money supply is M1?

    Learn how much money is in the M1 category of the United States money supply. Learn how M1 has averaged and changed over ... Read Answer >>
  3. Will M1 ever become obsolete?

    Learn why the M1 money supply may evolve and transform into different mediums but will continue to remain in existence for ... Read Answer >>
  4. What types of money are included in money supply?

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  5. How much does M1 enhance the multiplier effect of fractional reserve banking?

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