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M3

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In the US, M3 is a very broad measure of the money supply. M3 was published by the Federal Reserve Board until March 2006. M3 is the sum of M2 (savings deposits - MMDAs, small time deposits, and retail MMMFs, M1 (i.e. currency in circulation plus checking account deposits and other checkable deposits in banks, credit unions, and other depository institutions) and other larger deposits not included in M1 and M2. Those deposits included in M3 (but not in M1 and M2) are large deposits and jumbo repurchase agreements (i.e. RP or REPO of $100,000 or more). MMMFs are also included in M3 but in addition to the retail MMMFs (i.e. Money Market Mutual Funds), M3 also includes institutional MMMFs. Finally, certain Eurodollar deposits are added to the M3 deposits. Those Eurodollars deposits are held in branches of U.S. banks that are located abroad. Publication of M3 was indeed discontinued on March 26, 2006. Reasons cited by the Federal Reserve Board is that M3 does not add significant value about economic activities compared to M2 and that M3 has not been used in the the monetary policy process so the cost of collecting and publishing M3 data was not necessary.



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