In 1 month, the Money Money (M1) of the Chinese Yuan almost doubled, aroused many questions. This sudden leap raises questions about the causes and consequences of this unexpected development. How to explain such an increase in such a short time?
In a month the money mass (M1) of the Chinese Yuan doubled
Some investors were surprised by discovering the graphic of the M1 monetary mass of the Chinese Yuan at the start of the year. He reveals An quantity of yuan almost doubled in relation to the data of December 2024.
For Bitcoin users, this constitutes additional proof of the corruption of fiduciary currencies, perceived as a monetary dilution tool allowing governments to take an invisible tax, considered by some as a form of flight.
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However, a much more rational explanation justifies this sudden increase in the money supply. And this time, it is not due to the ticket board.
M1 monetary mass of Chinese yuan
In reality, the passage of the M1 M1 Money mass of the Yuan from 67,100 billion to 112,450 billion is explained above all by a revision of his calculation method.
Banque Populaire de China (PBOC) announced this change in early December. From now on, the indicator of the M1 monetary mass will include M0 (currency in circulation), corporate -visual deposits, individual deposits of individuals, as well as reserve funds of customers held by non -banking payment institutions.
According to Pan Gongsheng, Governor of the PBOC, This revision aims to better monitor the M2, the extended money supply, and the overall liquidity.
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M0, M1, M2, M3 Quésaco?
The world of finance likes simplicity, and that is why different terms are used to describe the money supply. In addition, these terms vary between the United States and Europe.
In the United States, The M0 includes the currency in circulation as well as the bank reserves held at the Federal Reserve (Fed)while in the euro zone, It only concerns physical currency. The M1 is similar in the 2 regions, but in the United States, it also includes passenger checks.
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In the United States, The M2 includes M1 as well as savings accounts, deposit certificates of less than 100,000 USD and accounts on the monetary market. In Europe, it also includes savings accounts and term deposits.
The M3 has not been published in the United States since 2006while it remains used in the European Union to measure financial assets with limited liquidity.
In practice, The M2 is the indicator most used by investors, because it offers a reliable overview of the money supply without too much complexity. The distinction between these categories makes it possible to analyze the movements of the funds: a rapid increase in the M1 reflects an increase in consumption, while an increase in the M2 with a stable M1 indicates an increase in savings and long -term investments .
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Sources: Chinadaily, tradingView
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