In the EU, the narrow measure of the money supply, M1, consists of currency in circulation plus overnight deposits.
The next, slightly broader measure, unsurprisingly termed M2, is the sum of M1 and other short-term deposits, those with an agreed maturity of up to two years and those redeemable at notice of up to three months.
The broad monetary measure which plays a major role in the European Central Bank’s monetary policy decisions, M3, is equal to M2 plus repurchase agreements plus money market fund shares/units and money market paper.
