§ Mr. Litterickasked the Chancellor of the Exchequer if he will publish in the Official Report and elsewhere definitions of M1, M2 and M3 in language that can be easily understood by the British people.
§ Mr. Denzil DaviesThe following are broad definitions of MI, M2 and M3; they are not intended to be statistically exact. The definitions relate to the United Kingdom: these concepts vary from country to country.
M1 is a narrow version of money. It consists mainly of notes and coin in circulation with the public and bank current accounts in sterling held by the private sector. It thus includes the two most frequently used means 356W of payment, cash and the bank current accounts on which cheques are drawn.
M2 was a slightly wider definition of money, which is no longer used.
M3 is the widest definition of money in common use. It consists of notes and coin in circulation with the public—as in M1—together with all accounts—not just current accounts—with banks—both in sterling and foreign currencies—held by the United Kingdom private and public sectors.