Monetary mass - Financial definition
Concise definition of the term monetary mass
A monetary mass is an aggregate of the total amount of monetary assets of certain categories available in an economy at a specific time, including cash, coins, and balances held in bank accounts.
Comprehensive definition of the term monetary mass
Monetary mass encompasses is measured in different aggregates, such as M1, M2, and M3, each including progressively broader categories of money. For instance, M1 includes physical currency and demand deposits, while M2 adds savings accounts and time deposits. Central banks, such as the Federal Reserve in the United States, or the European Central Bank in the eurozone closely monitor and manage the money supply to influence economic activity, control inflation, and stabilize the financial system.
Practical examples of managing monetary mass include open market operations, where central banks buy or sell government securities to adjust the amount of money circulating in the economy. Understanding the nuances of monetary mass is crucial for policymakers, economists, and investors as it affects interest rates, investment flows, and overall economic health.