What is the money supply? How much money is in the economy
By SendPay Business · · 2 min read
The money supply is the total amount of money in an economy at a given time. It includes notes and coins, but most of it is money held in bank accounts.
Narrow and broad money
- Narrow money: notes and coins, plus money banks hold at the central bank.
- Broader measures add current accounts and other easy-to-access deposits.
- The broadest measures also include savings and some other deposits. In the UK the Bank of England's main broad measure is called M4.
Where most money comes from
Most money in a modern economy is created by commercial banks when they lend. When a bank makes a loan, it credits the borrower's account with new deposits. The Bank of England has explained this in its own published articles. Repaying loans removes that money again.
Why central banks watch it
Fast growth in the money supply can be a sign of rising spending and future inflation, while a shrinking supply can point to a slowdown. Central banks also change it directly, for example through quantitative easing.
Where SendPay fits
SendPay isn't a bank. SendPay platforms give your customers GBP, EUR and USD accounts, transfers and branded Visa cards under your own brand, powered by licensed partners. SendPay doesn't offer lending.
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Build my platform →Questions people ask
What has inflation done to my money?
See future prices, what cash is worth today, and whether savings keep up.
Inflation calculator →What is fractional reserve banking?
Banks keeping only part of deposits as cash and lending out the rest.
Fractional reserve banking →What is quantitative easing?
A central bank creating money to buy bonds and support the economy.
Quantitative easing →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.