Definitions of the money supply | tutor2u Economics
Study notes

Definitions of the money supply

  • Levels: AS, A Level
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC

Here are the main measures of the money supply in the UK economy

Notes and coins:

  • Notes and coins in circulation outside the Bank of England
  • The Bank of England (BoE) makes sure it creates enough banknotes to meet the public’s demand for them


  • Notes and coin plus central bank reserves


  • Notes and coin plus all sight deposits held by the non-bank private sector


  • Notes and coin plus all retail deposits (including retail time deposits) held by the non-bank private sector


  • Notes and coin, deposits, certificates of deposit, securities with a maturity of less than five years held by the non-bank private sector.

Narrow Money

The narrow money definition of the money supply is a measure of the value coins and notes in circulation and other money equivalents that are easily convertible into cash such as short term deposits in the banking system

Broad Money

Broad money is a measure of the total amount of money held by households and companies in the economy

Broad money is made up mainly of commercial bank deposits — which are essentially IOUs from commercial banks to households and companies — and currency — mostly IOUs from the central bank

Subscribe to email updates from tutor2u Economics

Join 1000s of fellow Economics teachers and students all getting the tutor2u Economics team's latest resources and support delivered fresh in their inbox every morning.

You can also follow @tutor2uEconomics on Twitter, subscribe to our YouTube channel, or join our popular Facebook Groups.

Job board

Business, Economics and Politics Teacher

Bromley High School, Bromley, Kent


Teaching Vacancies


Advertise your vacancies with tutor2u

Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.

Find our more ›

Advertise your teaching jobs with tutor2u

A New Home for tutor2u Resources

We've just flicked the switch on moving all our digital resources to instant digital download - via our new subject stores.

For every subject you can now access each digital resource as soon as it is ordered. This will always be the latest edition of each resource too (and we'll update you automatically if there is an upgraded version to use).

Simply add the required resources to your cart, checkout using the usual options and your resources will be available to access immediately via your mytutor2u account.