Narrow Money

Written By
Paul Tracy
Updated August 5, 2020

What is Narrow Money?

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 Does Narrow Money Work?

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 Does Narrow Money Matter?

Narrow money is the most liquid form of money.