ABSTRACT
The behaviour of various monetary aggregates in the quite bewildering. From the beginning of 1991 through June 1992, M1 grew at an annual rate of 10.5%, the adjusted monetary base at an annual rate of 7.8%, and adjusted reserves at an annual rate of 11.1 %, but M2 grew at an annual rate of only 2.4%. With respect to narrower monetary aggregates such as the base or M1, policy has to be designed to cope with permanent changes in trends such as occurred around 1980. The M2 aggregate as currently defined is available in official published sources only back to January 1959, though unofficial estimates exist for the period since January 1948. Some analysts object to the implementation of monetary policy through the monetary base, because the base is largely currency, and large quantities of currency may be held by foreigners and/or are held as a result of illegal activities.
