What Does Monetary Aggregates Mean?
Broad categories measuring the total value of the money supply within an economy. In the United States, the standardized monetary aggregates and their measured contents are known as: M0 – Physical cash and coin M1 – All of M0 plus demand deposits, traveler’s checks M2 – All of M1 plus savings deposits, money market shares There is also an M3 aggregate that includes larger (greater than $100,000) time deposits and institutional funds. The M3 measure is no longer tracked by the Federal Reserve as of 2006, although analysts still calculate the figure broadly. The Federal Reserve uses monetary aggregates to measure the effects of open-market operations, like changing the discount rate or trading in Treasury securities.
