BANKING AFFAIRS

Detailed explanation-1: -Broad money (M3) includes currency, deposits with an agreed maturity of up to two years, deposits redeemable at notice of up to three months and repurchase agreements, money market fund shares/units and debt securities up to two years.

Detailed explanation-2: -M3 money supply: Known as ‘broad money, ’ it constitutes M2 and money market funds like mutual funds, repurchase agreements, commercial papers, etc. M4 money supply: It comprises M3 and all other least liquid assets, usually outside commercial banks.

Detailed explanation-3: -Besides all the components of M1, it includes net time deposits (or fixed deposits or term deposits) of the people with the commercial banks. Therefore, M3 is also called broad money.

Detailed explanation-4: -M3 is broad money. M3 = M1 + Time deposits with the banking system. M2 = M1 + Savings deposits of post office savings banks. M1 = Currency with public + Demand deposits with the Banking system (savings account, current account).

Detailed explanation-5: -It is typically denoted as M1. Narrow money is a subset of broad money. Deposits in foreign currency are excluded from all monetary aggregates by most countries, or they are included only in broad money, with some exceptions.