OECD M3 Money Supply Index

OECD M3 Money Supply Index

The OECD M3 Money Supply Index is an important economic indicator that tracks changes in the money supply of OECD member countries. This index measures the time-series changes in broad money supply (M3) across countries, with 2015 as the base year (100). M3 includes cash, deposits, short-term financial instruments, and all liquid assets available for economic activity.

The importance of this indicator lies in the fact that money supply reflects inflation, growth rates, and the effectiveness of monetary policy throughout the entire economy. When central banks implement monetary easing policies, money supply increases, and conversely, it decreases with tightening policies. By observing the OECD-wide index, the direction of monetary policy among advanced countries and the relative economic conditions of each country can be compared.

As a general trend, since the 2008 financial crisis, large-scale monetary easing has been implemented in many OECD member countries, resulting in substantial increases in money supply. Particularly during the 2020 coronavirus crisis, central banks of each country supplied large amounts of liquidity, causing the index to rise markedly. A noteworthy point is that increases in money supply do not necessarily lead directly to increased inflation. The effects on economic growth rates and asset prices also need to be considered. Additionally, the differences in money supply increase and decrease rates among countries serve as important information suggesting differences in each country's monetary policy stance.