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Economic Calendar Terms

M2 Money Supply

The People_s Bank of China
No.32 Chengfang street,
Xi Cheng district,
Beijing,China 100800

Coverage includes people's banks, policy banks, state-owned commercial banks, other commercial banks, city commercial banks, urban credit cooperatives, rural credit cooperatives, trust and investment companies, financial companies, leasing companies, postal savings deposit institutions and foreign funded financial institutions.

Monetary aggregates, known also as "money supply", is the quantity of currency available within the economy to purchase goods and services. Depending on the degree of liquidity chosen to define an asset as money, various monetary aggregates are distinguished: M0, M1, M2, M3, M4, etc.

M2 is a monetary aggregate that includes all physical currency circulating in the economy (banknotes and coins), operational deposits in central bank, money in current accounts, saving accounts, money market deposits and small certificates of deposit.Excess money supply growth potentially can cause inflation and generate fears that the government may tighten money growth by allowing the interest rates to rise which in turn, lowers future prices.