M1(redirected from FAB classification)
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A measure of money supply used by various central banks that includes only currency in circulation and very near money instruments. In the Federal Reserve System, M1 includes all physical currency and deposits in checking accounts as well as Negotiable Orders Withdrawal accounts. It does not include savings accounts, certificates of deposit, or money market accounts. The European Central Bank defines M1 as the aggregation currency in circulation and overnight deposits. While different central banks have slightly different definitions of M1, all include money currently in circulation and the money most likely to come into circulation in the shortest possible amount of time. Therefore, it is the most liquid calculation of the money supply. See also: M0, M2, M3, M4.
The most restrictive measure of the domestic money supply that incorporates only money that is ordinarily used for spending on goods and services. M1 includes currency, checking account balances (including NOW accounts and credit union share draft accounts), and travelers' checks. This money measure is closely watched by financial observers because it is a key indicator of past and future Federal Reserve actions.