India Indeks Uang Beredar M1 OECD

# OECD M1 Money Supply Index

## Content of the Indicator

The OECD M1 Money Supply Index is an economic indicator that measures the quantity of the most liquid currency in circulation within the economy. M1 refers to the narrowest definition of money supply, composed of cash (banknotes and coins) and demand deposits (such as current accounts). Presented in index form with 2015 as the base year (100), it enables comparison of changes in money supply across countries over time.

## Importance of the Indicator

There are multiple reasons why this indicator is important. First, money supply serves as a leading indicator of overall economic activity. An increase in money supply suggests the possibility that consumption and investment will become more active, forming the foundation for economic growth.

Second, it functions as a means to measure the effectiveness of central bank monetary policy. It allows evaluation of whether monetary easing policies are actually providing liquidity to the market.

Third, it is an important information source for assessing inflationary pressures. When money supply increases rapidly, the risk of inflation tends to rise.

## General Trends and Points of Note

During global economic crises or pandemic emergencies, central banks of each country implement large-scale monetary easing, and M1 money supply tends to show significant increases. Particularly since 2020, money supply has expanded rapidly in many OECD member countries.

A notable point is the difference in money supply growth rates among countries. Depending on economic structures and monetary policy stances, the movement of indices differs across countries. Additionally, when money supply growth rates diverge from business cycle trends, potential risks may exist in the economy, making it a monitoring target for policy authorities and investors.