Money Supply M1, M2, M3: And Why Bitcoin Is Different

Short answer: M1, M2 and M3 are levels of the money supply, sorted by how quickly you can get at the money. M1 is cash and current accounts, M2 adds savings and short-term deposits, M3 adds a few near-money instruments. Underneath sits central bank money (often called M0), which only the central bank can create. How big each level is gets decided anew every day by banks, customers and the central bank. Bitcoin has only one number, and it is written in code.

You constantly read that "the money supply is growing". But which one? Depending on whether someone means M1, M2 or M3, the euro money supply has grown fourfold or sixfold since 1999, and central bank money even ninefold. This article explains what is in each level, how the ECB, the Swiss National Bank (SNB) and the Fed define them, and what the figures show over decades. Whether the M2 money supply moves the bitcoin price is examined in a separate article: M2 money supply and the bitcoin price.

The levels of the money supply at a glance

Think of the money supply as the layers of an onion. At the centre is the money you can pay with immediately. Each layer further out is a little less liquid: you first have to give notice, wait for a term to end or sell something.

The important difference is between the bottom level and the rest. Central bank money is created by the central bank alone. Banks use it to pay each other. M1 to M3, on the other hand, measure the money held by households and companies. Most of it is created by the commercial banks themselves when they grant loans. How exactly that works, and why banks don't need to collect savings to do it, is explained in The fiat money system explained.

What M0 actually is

"M0" is not an official ECB term. It usually means the monetary base or base money: cash plus the balances banks hold at the central bank. Some people use M0 for cash alone. When you see a chart of "M0", it is worth checking the footnote.

How the ECB, SNB and Fed define the money supply

Euro area (ECB)

The ECB defines the levels like this:

• M1: currency in circulation (banknotes and coins) and overnight deposits, i.e. current accounts and instant-access savings.
• M2: M1 plus deposits with an agreed maturity of up to 2 years (fixed-term deposits) and deposits redeemable at notice of up to 3 months (savings deposits).
• M3: M2 plus repurchase agreements, money market fund shares and debt securities issued by banks with a maturity of up to 2 years.

For the ECB, M3 is the most important level. At the start of monetary union it even set a reference value for M3: 4.5% growth a year. In fact, euro M3 has grown by about 5.1% a year on average since 1999.

Switzerland (SNB)

The SNB cuts the levels slightly differently:

• M1: currency in circulation, sight deposits and deposits in transaction accounts.
• M2: M1 plus savings deposits.
• M3: M2 plus time deposits.

The difference from the euro area: in Switzerland, fixed-term deposits only count in M3; in the euro area they already count in M2. Anyone comparing euro M2 with franc M2 directly is not comparing like with like. Switzerland in 2023 shows what that can mean: when time deposits paid interest again, many people moved their money, and franc M2 fell sharply while M3 stayed almost flat. The figures are in the M2 article.

The SNB's monetary base consists of banknotes in circulation and the sight deposits of domestic banks at the SNB.

USA (Fed)

The Fed publishes the money supply monthly in its H.6 release:

• M1: currency in circulation, demand deposits and other liquid deposits. Since May 2020 this includes savings deposits.
• M2: M1 plus small-denomination time deposits (under $100’000) and retail money market funds.
• M3: no longer exists. The Fed stopped publishing it on 23 March 2006. Its reasoning: M3 did not convey any information about the economy that was not already in M2, and had played no role in monetary policy for years. The cost of collecting the data outweighed the benefits.

That is why bitcoin charts showing "the money supply" almost always mean US M2. If someone claims the Fed dropped M3 to hide something, it is worth knowing that some of the components dropped at the time are still published in other statistics.

An example: where does your money land?

The example shows that the money supply can rise or fall without any new money being created anywhere. It is enough for people to move their money around.

How large the money supply is today

As of September 2026 (euro area central bank money: end of September 2026):

Sources: ECB (BSI and Eurosystem weekly financial statement), SNB data portal, Fed via FRED. Euro area central bank money = banknotes in circulation, banks' current accounts and the deposit facility.

So in the euro area, M1 to M3 come to €11 to 18 trillion. Only about €1.62 trillion of that is cash. The rest is account balances, i.e. claims on banks.

How much the money supply has grown since 1999

Since the euro was launched, every level has grown strongly, but by different amounts:

Starting values: euro area January 1999 (central bank money end of 1998), USA January 1999, Switzerland December 1999. Calculated from the stock data of the ECB, SNB and Fed.

Over even longer periods the picture becomes clearer. US M2 has grown 82-fold since 1959. In Switzerland, M3 has risen almost fivefold since the end of 1984.

Why central bank money grew the most

What stands out is that the bottom level grew faster than M3. The reason is the crises since 2008. The Fed and the ECB bought bonds on a large scale and gave banks long-term loans. From 2011, the SNB bought foreign currency on a large scale to slow down the franc's appreciation. In each case the central banks paid with newly created central bank money.

Most of that money, however, ended up in banks' accounts at the central bank. It only reaches you as a customer if banks lend more or the central bank buys securities from non-banks. That is why M3 grew much more slowly than central bank money. The old textbook idea that every euro of central bank money automatically creates a multiple in deposit money has not held up.

The amount is a decision

Central bank money can also shrink when the central bank wants it to:

• USA: peak of $6.41 trillion in December 2021, $5.45 trillion in September 2026.
• Euro area: peak of about €6.47 trillion in November 2022, €3.93 trillion at the end of September 2026. Banks repaid long-term ECB loans, and the ECB let bonds run off.
• Switzerland: peak of CHF 757 bn in April 2022, CHF 499 bn in September 2026.

Whether money is added or disappears is therefore decided by people: the ECB Governing Council, the SNB Governing Board, the Fed's Open Market Committee, and alongside them every bank that grants a loan. Whoever receives new money first has an advantage over everyone it reaches later. That is described in The Cantillon effect.

Why bitcoin is different

Bitcoin has no levels and no committee. There is a single amount: the bitcoin that exist on the blockchain. On 13.11.2026 that was about 20.11 million.

How many are added is set in the rules that every bitcoin node checks:

• About every 10 minutes a new block is created. Whoever finds it may credit themselves a fixed number of new bitcoin.
• This reward started at 50 bitcoin in 2009 and halves every 210’000 blocks, roughly every four years. Since April 2024 it has been 3.125 bitcoin per block.
• If a miner tries to take more, all other nodes reject the block. The miner would then have used electricity and received nothing.

This is what the schedule looks like, with each halving as a step:

Why exactly 21 million, and what a halving triggers in detail, is explained in Why there are only 21 million bitcoin and The bitcoin halving explained.

Euro, franc and bitcoin compared

Can't the 21 million simply be changed?

Technically, any code can be changed. But a change only applies to those who choose to install it. All other nodes would reject blocks with more bitcoin. A new chain with a new coin would emerge, as with past forks. Anyone holding bitcoin has little reason to agree to a rule that dilutes their share. That is the difference from a central bank: it decides for everyone who uses its currency. With bitcoin, every user decides for themselves which rules their software enforces.

One caveat applies here too: bitcoin on an exchange are like a balance at a bank, a promise. An exchange could book more balances than it owns bitcoin. That doesn't change the amount on the blockchain, but it does change your risk. Only bitcoin in your own wallet are part of the 21 million that nobody can dilute for you.