Broad money

In economics, broad money is the widest measurement of the money supply. It is generally

"One measure of the money supply that includes M1, plus savings and small time deposits, overnight repos at commercial banks, and non-institutional money market accounts. This is a key economic indicator used to forecast inflation, since it is not as narrow as M1 and still relatively easy to track. All the components of M2 are very liquid, and the non-cash components can be converted into cash very easily."[1]

However broad money can have different definitions depending on the situation of usage, usually it is construted as required to be the most useful indicator in the situation. More generally, broad money is just a term for the least liquid money definition being considered and less a fixed definition across all situations[2]. As such broad money may have different implications in the United States than it does in Australia, and even from academic paper to paper (Lim 2003). However, broad money will almost always be defined exactly before discussion, and when not it is usually sufficient to assume it is a very wide money definition.

References

Lim, Ewe-Ghee; Sriram, Subramanian (2003), Factors Underlying the Definitions of Broad Money: An Examination of Recent U.S. Monetary Statistics and Practices of Other Countries, IMF Working Paper