What Belongs in the M2 Category?

M2 Money Supply Category

M2 money supply category includes a broader set of financial assets compared to M1. It consists of not only physical currency and checking account deposits but also near money and savings deposits. Near money refers to assets that can be quickly converted into cash, while savings deposits are held in savings accounts which are slightly less liquid than checking accounts but can still be easily accessed.

Components of M2

The components of M2 category include:

• Physical currency in circulation
• Checking account deposits
• Near money, such as money market mutual funds
• Savings deposits, including deposits in savings accounts

The inclusion of near money and savings deposits in the M2 category adds an element of flexibility and accessibility to the money supply, providing individuals and businesses with various options for storing and accessing their funds.