Money is as hard to measure and define as it is to control. Money is graded according to its LIQUIDITY – notes and coins being completely liquid, whereas some kinds of bank deposits become spendable only after notice to withdraw them has expired.
In Britain:
• M1 is notes and coins in circulation, plus sterling sight deposits (that is, those withdrawable without notice) held by the private sector.
• Sterling М3 (М3) is Ml plus sterling time deposits (those requiring notice of withdrawal) of the British private sector, plus all sterling deposits of the British public sector. To get M3, add the foreign currency deposits of all British residents.
• PSL2, short for private sector liquidity, is notes and coins in circulation; all sterling deposits (that is, including time deposits and certificates of deposit); other money market instruments (for example, treasury bills, bank bills and local authority debt held by the non-bank private sector); building societies' share and deposit accounts, and some national savings securities.
The United States uses three measures:
• M1 is defined as currency in circulation, travellers' cheques, demand deposits of the private sector at commercial banks, automatically withdrawable deposit accounts at banks and thrift institutions, credit union share draft accounts, and demand deposits at mutual savings banks.
• M2 is Ml plus savings and small-denomination time deposits, overnight deposits at commercial banks, overnight Eurodollars held by American residents (other than at Caribbean branches of Fed member banks) and balances of accounts with money market funds.
• M3 is M2 plus large denomination time deposits, companies term repurchase agreements at commercial banks and savings and loan associations, and money markets funds held by institutions.
Based on: The Pocket Economist
Words you may need:
measurev измерять
gradev (зд.) группировать, классифицировать
spendableadj могущий быть истраченным
notice to withdraw (the deposit)уведомление о снятии вклада
sterling sight depositвклад до востребования в фунтах стерлингов
PSL-private sector liquidityликвидность частного сектора Великобритании (широкий показатель денежной массы в обращении)
certificate of depositдепозитный сертификат
building societyстроительное общество
travellers' chequesдорожные чеки
share draft accountчековый паевой счет
mutual savings bankвзаимно-сберегательный банк
overnight Eurodollarsсуточные евродоллары
money market fundвзаимный фонд денежного рынка
repurchase agreement (REPO)соглашение о продаже и обратной покупке (РЕПО)
savings and loan associationссудо-сберегательная ассоциация
b) Reread the text more carefully to complete the sentences below:
1. Money is graded ....
2. Notes and coins ....
3. Ml is....
4. Private sector liquidity is notes and coins in circulation plus ....
5. Sterling M3 is M1 plus ....
6. In the United States Ml includes ....
7. M2 is M1 plus... .
8. M3 is M2 plus....