Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Narrow Money

What it is:

Narrow money is a colloquial term for the total of a country's physical currency plus demand deposits and other liquid assets held by the central bank. The economic term for narrow money is M1.

How it works (Example):

Narrow money is the most accessible money in an economy, which is why it is restricted to paper currency, coins and demand deposits (money in checking accounts, savings accounts and other highly liquid accounts).

Why it Matters:

Narrow money is the most liquid form of money.