Out of the three measures of money supply,
M3 money supply is the broadest concept, the other two being M1 and M2. M3 is an estimate of the entire supply of money in the economy and it has experienced the all time high in the near past. It has more than doubled since 1995 and in this year itself, it has shown an approximate increase of $250 billion according to Federal Reserves data. M3 takes into its expanse, M2 and all Certificates of Deposits.
M1 includes travelers checks, currency in the hands of individuals, demand deposits and other deposits against which a check can be written, checking accounts minus the amount of money in the federal reserves float, tenders held outside banks, automatic transfer services (ATS) accounts, negotiable order of withdrawal (NOW) accounts, Super NOW accounts and credit union share drafts. Precisely, it includes all the currency in circulation, all paper money and minted coins. Along with these, M2 includes savings and other time deposits. All these are carried over into the next level of liquidity, M3.
The annual growth in Eurozone
M3 money supply rose unexpectedly in the recent past. It rose to 10.9%. This credit growth may cause inflation in the future. But till date this has not been the case, though M3 has risen faster than the European Central Bank's 4.5% non-inflationary reference value.
The Federal Reserve System has announced that they would not calculate M3 monetary aggregates any more. They want to "deemphasize" the role of M3 because the M1 and M2 money supply measures have received greater importance over the years. The individual components of M3 will however be published. However, this step on the part of the Federal Reserve has not been welcomed universally, because, in the last eight years, there has been a huge increase in the money supply. Figures of M3 help a lot in tracking movements in and out of M1 and M2 over time. After all, M3 includes M2 and institutional money market mutual funds, large denomination time deposits, balances in institutional money funds and repurchase liabilities issued by depository institutions.