ABSTRACT
M0 (E4)
The narrowest definition of the money
supply consisting only of notes and coin
in circulation plus bankers’ deposits with
the Banking Department of the BANK OF
ENGLAND. This measure was introduced
into the UK in October 1983 and given
increasing prominence in Treasury state-
ments from October 1985. So many pay-
ments are made by the transfer of bank
deposits that M0 is only a partial picture
of economic activity in a modern econ-
omy. Also changes in the method of wage
payment from cash to cheque change the
extent to which M0 is representative.
However, it has recently been regarded as
a useful guide to the size of the BLACK
ECONOMY that is dominated by cash trans-
actions. Changes in M0 can lead or lag
M1 (E4)
