M3 is a measure of the money supply that includes all assets in the Calculate M3 (M3 berekenen) definition plus large-denomination ($100,000 or more) time deposits, balances in retail money market mutual funds, and certain other larger liquid assets. The M3 measure is no longer published by the Board of Governors of the Federal Reserve System, but some market participants still track it.
What’s Included in M3?
M3 includes all of the assets in M2 plus several other asset categories that are less liquid but still considered to be part of the money supply. These include:
– balances in institutional money market mutual funds
– large-denomination ($100,000 or more) time deposits
– repurchase agreements
– Eurodollars held by U.S. residents at foreign branches of U.S. banks and foreign subsidiaries of U.S. banks
– balances in certain longer-term municipal notes
– commercial paper
– Treasury securities held as collateral for repurchase agreements.
M3 also used to include a category called “assets denominated in foreign currencies,” but this was discontinued in 2006.
How Is M3 Calculated?
The Federal Reserve doesn’t publish the formula for calculating M3 anymore, but we do know that it includes all of the assets in M2 plus several other asset categories that are less liquid but still considered to be part of the money supply. These include balances in institutional money market mutual funds; large-denomination time deposits repurchase agreements Eurodollars held by U.S. residents at foreign branches of U.S. banks and foreign subsidiaries of U.S. banks balances in certain longer-term municipal notes; commercial paper; and Treasury securities held as collateral for repurchase agreements.
M3 is considered to be a broad measure of the money supply and is used by the Federal Reserve as one tool in its monetary policy decisions. While the Fed no longer publishes M3, it continues to track and analyze this data each month. As such, economists still use changes in M3 as an indication of economic activity. Additionally, many banks and financial institutions use M3 as a key indicator of their liquidity. This, in turn, can be used to inform decisions about lending practices and interest rates. Therefore, M3 is still an important measure of the money supply and economic growth.
M3 is a measure of the money supply that includes all assets in the M2 definition plus large-denomination time deposits, balances in retail money market mutual funds, and certain other larger liquid assets. The M3 measure is no longer published by the Board of Governors of the Federal Reserve System, but some market participants still track it.
M3 is a measure of the money supply that includes all assets in the M2 definition plus large-denomination time deposits, institutional money market funds, and short-term repurchase agreements. The Federal Reserve uses M3 as one of its monetary policy tools to influence the supply of money in the economy. Although the Fed stopped publishing data on M3 in 2006, some private institutions still calculate it using different methodologies. The lack of data on M3 makes it difficult to know exactly how much money is in circulation but the broadest measure of the money supply (MZM) can be used as a proxy for M3.