M2 is the amount of broad money, which refers to the cash circulating outside the banking system plus corporate deposits, household savings deposits and other deposits, which includes all forms of money that may become real purchasing power, and usually reflects the changes in social aggregate demand and the pressure state of future inflation.
M2 is the balance of monetary funds used for consumption and production payments in financial institutions and non-financial institutions, and is an indicator used by monetary authorities to measure the amount of money. It mainly includes the following items:
1.Cash in circulation: This is the most basic form of money, including cash in people's hands, etc.
2.Demand deposit: refers to short-term deposits, such as check deposits, demand deposits, etc., which can be withdrawn at any time and used for payment.
3.Time Deposits and Savings Deposits: These are longer-term savings deposits, which can be withdrawn at any time, but there will be a certain interest loss.
4.Interbank deposits: deposits between commercial banks.
5.Others, such as banknotes, traveler's checks, etc.
M2 reflects reality + potential purchasing power, represents investment and the middle market, in our country M2 is more on behalf of the economy's monetary **, and the change in the amount of money reflects the monetary cycle.
Social financing, that is, social finance, represents the money that the real economy gets from the financial system, and in layman's terms, the economy's demand for funds, which is the total scale of loans provided by the financial sector to the whole society.
The financial system here is the concept of finance as a whole. From the perspective of institutions, including banks, trusts, insurance and other financial institutions; From the perspective of the market, it includes the credit market, the bond market, the ** market, the insurance market and the intermediate business market.
The scale of social financing includes four categories and more than 10 sub-items, including on-balance sheet (RMB loans, foreign currency loans), off-balance sheet (undiscounted bank acceptance bills, entrusted loans, trust loans, etc.), direct financing (**bonds, corporate bonds, domestic equity of non-financial enterprises), and other (insurance company compensation, investment real estate, small loan contracts, loan company loans, asset-backed loans of depository financial institutions**, loan write-off, etc.). Among them, the most important components are RMB loans, ** bonds and corporate bonds, which together account for nearly ninety percent of the total scale of social financing.
A simple relationship between the scale of social financing and M2.
The scale of social financing reflects the financial system's support for the real economy, while M2 reflects the liquidity provided by the financial system to the society and reflects the level of purchasing power of the whole society. The scale of social financing and M2 represent the asset side and the liability side of the financial system respectively, and are two sides of the same coin, which reflect the process of monetary policy transmission from different aspects, and the relationship between the two is complementary and mutually corroborative.