In economics, broad money refers to the most inclusive definition of the money supply. Since cash can be exchanged for many different financial instruments and placed in various restricted accounts, it is not a simple task for economists to define how much money is currently in the economy. Therefore, the money supply is measured in many different ways. Broad money is used colloquially to refer to a broad definition of the money supply.
In the U.S. the most common measures of the money supply are termed M0, M1, M2 and M3. These measurements vary according to the liquidity of the accounts included. M0 includes only the most liquid instruments, and is therefore narrowest definition of money. M3 includes includes liquid instruments as well as some less liquid instruments and is therefore considered the broadest measurement of money. Complicating the situation, different countries often define their measurements of the money slightly differently. In academic settings, the term "broad money" should be separately defined in order to prevent potential misunderstandings.
Investment dictionary. Academic. 2012.
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broad money — ➔ money * * * broad money UK US noun [U] ► ECONOMICS a measure of the amount of money that is available for use in an economic system and that includes cash, money in bank accounts, and also other money available for banks to use: »The 12 month… … Financial and business terms
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