Definition
- Narrow money
- Narrow money is the notes and coins in circulation together with the reserves commercial banks hold at the central bank.
- Not to be confused with: Broad money
- Broad money is the notes and coins held by households and firms plus their deposits at banks and building societies, including savings.
Test yourself
What is the difference between narrow money and broad money?
Narrow money is the money the state and central bank issue; broad money counts what households and firms hold, most of it bank deposits.