ABSTRACT
The narrowest definition presented by the Bank of England was termed Ml and consisted of notes and coin in circulation with the non-bank public, plus sterling current accounts held by the private sector only. This definition covers the generally acceptable means of payment in the system - cash and cheques. A second, slightly broader, definition of money supply introduced in 1970 was M2. This has been less widely used. M2 is Ml plus time deposit accounts of private sector UK residents with deposit banks Money Supply Measures, Ml, M2, Sterling M3 and M3 15 plus their deposits with the discount houses. The third definition of the money stock, M3, was broader: non-bank holdings of notes and coin plus all deposits of all residents with the UK banking. How useful a broad definition of money such as M3 is for observing and analysing the relationship between spending and the volume or means of payment is debatable.
