M2

M2

Measure of the U.S. money stock that consists of M1, certain overnight repurchase agreements and certain overnight Eurodollars, savings deposits (including money market deposit accounts), time deposits in amounts of less that $100,000 and balances in money market mutual funds (other than those restricted to institutional investors).

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M2

A measure of money supply used by the various central banks. In the Federal Reserve System, M2 includes all physical currency and deposits in checking accounts, and adds to this the amount of money in savings accounts, certificates of deposit up to $100,000 (or their equivalents), and money market accounts. The European Central Bank defines M2 as the aggregation currency in circulation, overnight deposits, deposits with maturities of up to two years, and deposits redeemable with notice of up to three months. The Japanese, Indian, and New Zealand central banks have definitions similar to (but not exactly the same as) the Federal Reserve's. While different central banks have slightly different definitions of M2, all include money currently in circulation and the money most likely to come into circulation. Therefore, it is the most common measure used in forecasting inflation. See also: M0, M1, M3, M4

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M2

A measure of the domestic money supply that includes M1 plus savings and time deposits, overnight repurchase agreements, and personal balances in money market accounts. Basically, M2 includes money that can be used for spending (M1) plus items that can be quickly converted to M1.