Money stock measures

Answer 1

DEFINITIONS OF MONEY STOCK MEASURES AND COMPONENTS (from FRS H.6 release, 12/28/06)

"Depository institutions" includes domestically-chartered commercial banks, thrift institutions (savings banks, savings & loan associations - S&Ls, credit unions), the U.S. branches and agencies of foreign banks, and Edge Act corporations.

M1 consists of:

1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions;

2) traveler's checks of non-bank issuers (traveler's checks issued by depository institutions are included in demand deposits);

3) demand deposits at domestically-chartered commercial banks, the U.S. branches and agencies of foreign banks, and Edge Act corporations (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and

4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions.

Seasonally adjusted M1 is constructed by summing currency, traveler's checks, demand deposits, and OCDs, each seasonally adjusted separately.

M2 consists of: M1 plus

1) savings deposits (including money market deposit accounts);

2) small-denomination time deposits (time deposits in amounts of less than $100,000), less individual retirement account (IRA) and Keogh balances at depository institutions; and

3) balances in retail money market mutual funds, less IRA and Keogh balances at money market mutual funds.

Seasonally adjusted M2 is constructed by summing savings deposits, small-denomination time deposits, and retail money funds, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

More details about these money measures, the components, their measurement, and reporting can be found at the December 2003 "Performance Evaluation of the H.6 Statistical Release, Money Stock Measures" at:

http://www.federalreserve.gov/releases/h6/perfeval2006.htm Note that the FRS discontinued publication of the M3 monetary aggregate and several of its components in March 2006. See:

http://www.federalreserve.gov/releases/h6/discm3.htm

page last checked & updated 1/8/08