Global M1 Money Supply — $50 Trillion of Instantly Spendable Money
M1 money supply represents the most immediately accessible layer of global liquidity — the money that can be spent right now, without conversion, waiting, or notice. At approximately $50 trillion globally as of early 2026, M1 encompasses every physical banknote in a wallet, every balance in a checking account, and every demand deposit held at a commercial bank worldwide. This $50 trillion figure represents the functional "fuel" of the global economy: the medium through which hundreds of trillions of transactions occur each year, from the smallest retail purchase to the largest corporate payment. The size and growth rate of M1 is one of the most closely monitored indicators in global monetary economics, since it directly reflects how much spending power is immediately available to consumers, businesses, and governments at any moment.
Understanding M1 requires appreciating how radically the definition has evolved in recent years. The most consequential change came in May 2020, when the Federal Reserve of the United States redefined M1 to include savings deposits — financial accounts that were previously classified exclusively as M2. This definitional change alone caused US M1 to leap from approximately $4 trillion to $16 trillion overnight, making it the largest single national M1 figure in history. The change reflected an economic reality: in the digital age, the distinction between a "demand deposit" (immediately spendable) and a "savings deposit" (theoretically requiring notice to withdraw) had become meaningless — most savings accounts now offer instant digital transfers indistinguishable from checking accounts. This shift illustrates a broader theme in the story of M1: the boundaries of liquid money are constantly being reshaped by technology, regulation, and financial innovation.
The composition of M1 reveals a striking truth about modern money: the vast majority of it — approximately 72% — exists only as digital entries in commercial bank databases. Physical currency (coins and notes) accounts for just 18% of global M1; the remainder exists as demand deposits and other immediately transferable digital balances. This digital dominance has enormous implications for how central banks conduct monetary policy, how governments distribute stimulus, and how financial crises propagate. In a world where most M1 is digital, money can be created and destroyed with extraordinary speed — as demonstrated by the 2020 US stimulus packages, which transferred trillions of dollars to household accounts in a matter of weeks, and by the subsequent Fed tightening cycle that began in 2022, which contracted M1 through higher interest rates at a similarly rapid pace. The global inflation surge of 2021-2023 and the subsequent disinflation are direct consequences of this M1 expansion and contraction cycle.
What Is M1 Money Supply? — Components, Definition & Global Scope
M1 is the first and most liquid tier of the monetary aggregates that economists use to measure the money supply. It is defined as the sum of all physical currency in circulation plus all deposits that can be converted into spending power immediately — without any waiting period, notice requirement, or conversion cost. The two primary components of M1 are: (1) Currency in circulation — the coins and banknotes held by the public outside the banking system, representing the most tangible, universally recognised form of money; and (2) Demand deposits — balances in checking and current accounts at commercial banks, which can be accessed instantly via debit card, electronic transfer, or check. In the United States (and increasingly globally), M1 also includes "other checkable deposits" such as Negotiable Order of Withdrawal (NOW) accounts and Automatic Transfer Service (ATS) accounts, plus traveller's checks.
The critical distinction between M1 and broader aggregates (M2, M3) is immediacy of access. Every dollar in M1 can be spent without delay — it is the active, circulating medium of exchange. When you swipe a debit card, the balance you're spending is M1. When you receive a wire transfer, the credited funds join M1. The global financial markets that process trillions of dollars in daily transactions are built upon the M1 infrastructure of demand deposits and digital payment rails. By contrast, M2 adds savings deposits (which may technically require advance notice to withdraw), small-denomination certificates of deposit, and money market fund balances — all slightly less liquid than pure M1. Understanding this hierarchy is essential for interpreting central bank communications: when policymakers discuss "tightening liquidity conditions," they are often referring specifically to the contraction of M1 through higher reserve requirements, overnight rates, or reduced quantitative easing.
At the global level, the structure of M1 reflects dramatic differences in financial development across economies. In advanced economies (US, Eurozone, Japan, UK), demand deposits overwhelmingly dominate M1 — often representing 80-90% of the aggregate — because near-universal banking access means almost all transactions are conducted digitally. In emerging markets (India, parts of Sub-Saharan Africa, Southeast Asia), physical currency represents a much larger share of M1, often 30-50%, reflecting the approximately 1.4 billion unbanked adults worldwide who rely on cash for daily transactions. This gap is narrowing rapidly: fintech innovation and mobile money platforms (M-Pesa in Kenya, Paytm in India, Alipay in China) have dramatically expanded digital financial access — India's UPI (Unified Payments Interface) processed over 100 billion transactions in 2024, the world's largest real-time payment system. These platforms effectively convert informal cash economies into demand deposit economies, organically expanding M1 in the process.
Global M1 by Country — 2026 Snapshot
The distribution of global M1 across major economies reveals stark concentrations of liquid money. The US holds 37% of the total tracked M1 among major economies — partly reflecting genuine economic scale and partly the 2020 definitional expansion. China holds 28%, and the Eurozone 24%. These three zones alone account for nearly 90% of tracked global M1, underscoring how profoundly the monetary policy decisions of the Federal Reserve, European Central Bank, and People's Bank of China shape global liquidity conditions. Japan contributes 11.6% of tracked M1 despite decades of ultra-loose monetary policy that has kept both nominal GDP and M1 growth subdued relative to its economic size. The following chart shows current M1 levels with hover interaction — click or hover each bar for detail.
M1 Money Supply by Country — US, China, Eurozone, Japan, UK & More
The United States holds the world's largest M1 money supply at approximately $18.4 trillion as of December 2025, according to the Federal Reserve's H.6 statistical release. This figure, however, requires important context: under the pre-2020 definition (which excluded savings deposits from M1), US M1 would be approximately $3.5-4 trillion — placing it below China in raw liquid money terms. The post-reclassification US M1 reflects the Fed's acknowledgement that digital savings accounts are functionally identical to demand deposits in the modern banking system. The US dollar's status as the world's reserve currency — accounting for approximately 58% of global foreign exchange reserves and over 85% of all foreign exchange transactions — gives US M1 dynamics outsized global importance. When US M1 contracts (as it did in 2022-2023, falling from $21.5T to $18T), it tightens dollar liquidity worldwide. Understanding the US M1 trajectory is essential for anyone analysing the US financial markets and their global spillover effects.
China holds the world's second-largest M1 at approximately $14.2 trillion (approximately 100 trillion yuan) as of mid-2025, using China's narrower traditional M1 definition. China's M1 reflects a very different banking structure: Chinese households save at extraordinarily high rates (household saving rate ~35% of income), and a large proportion of liquid money is held in state-owned commercial banks with close policy linkage to the People's Bank of China (PBOC). China's M1-to-M2 ratio is approximately 31% — meaning that for every dollar of instantly liquid M1, there are approximately $3 in less liquid M2. This low M1/M2 ratio partly explains why China can have the world's largest M2 ($45.7T) while having a much smaller M1: Chinese savers prefer longer-term deposits and wealth management products over demand accounts. China's M1 growth of +3.8% year-over-year in 2025 reflects the ongoing effects of the property sector slowdown and cautious consumer sentiment. For a broader context on how China's monetary scale shapes economic output, see our analysis of countries with the largest GDP worldwide.
The Eurozone maintains the third-largest M1 at approximately €10.1 trillion ($10.7 trillion), according to European Central Bank Bank Sector Indicator (BSI) data. Eurozone M1 growth has been +4.1% year-over-year — the fastest among developed economies — as the ECB began cutting interest rates in mid-2024, stimulating bank lending and deposit creation. Japan has M1 of approximately ¥870 trillion (~$5.8 trillion), with Bank of Japan data showing modest growth of +2.0% amid the central bank's careful normalisation of its decade-long negative interest rate policy. The United Kingdom holds approximately £1.5 trillion (~$1.9 trillion) in M1, with the Bank of England tracking M4 (rather than M1/M2 directly) as its preferred broad money aggregate. The dynamics of UK M1 are closely related to broader trends in UK financial markets. India has seen the fastest M1 growth among the top-10 economies at approximately +8.2%, driven by the rapid expansion of digital payments (UPI), Jan Dhan banking inclusion program, and strong credit growth in a high-growth economy.
Top 10 Countries by M1 Money Supply — 2026
The following ranked bars visualise the M1 standings across the top 10 economies. The scale of the gap between the top-3 (US, China, Eurozone) and the rest is striking — the UK at $1.9T holds just 10% of US M1, while South Korea at $0.4T holds just 2.2%. This concentration reflects both economic scale and the structure of banking systems: advanced economies with large, developed banking sectors tend to have higher M1 relative to GDP than emerging markets where more economic activity remains informal and cash-based.
M1 Growth Trends — The 2020 Explosion, Post-Pandemic Contraction & Recovery
The history of global M1 in the 2020s is a story in three acts: unprecedented expansion, inflation-driven contraction, and cautious recovery. From 2015 to 2019, US M1 grew steadily at 5-8% annually — a healthy, unremarkable pace consistent with moderate economic expansion and the ongoing shift from cash to digital payments. Then came March 2020: the COVID-19 pandemic triggered the most aggressive monetary policy response in modern history. The Federal Reserve cut rates to near-zero, launched $4+ trillion in quantitative easing (purchasing Treasury and mortgage-backed securities), and the US government distributed approximately $5 trillion in fiscal stimulus. The combined effect was extraordinary: US M1 (under the new broader definition) surged from approximately $4.0 trillion (February 2020, old definition) to $20.5 trillion by end-2021 — a nominal increase of over $16 trillion in less than 24 months. Even stripping out the definitional change, the real stimulus-driven M1 expansion was approximately $4-5 trillion in organic money creation through bank lending and government transfers.
The consequences of this M1 explosion were felt globally. As liquid money flooded household accounts, consumer spending surged — but supply chains, disrupted by the pandemic, could not keep up. The resulting supply-demand imbalance drove inflation to its highest levels in four decades: US CPI hit 9.1% in June 2022, Eurozone HICP reached 10.6% in October 2022, and UK inflation peaked at 11.1%. Central banks responded with the most aggressive rate-hiking cycle since the 1980s: the Fed raised rates from 0-0.25% in March 2022 to 5.25-5.50% by July 2023 — the fastest 525-basis-point increase in 40 years. Higher rates incentivised households to move money from M1 demand accounts into higher-yielding savings instruments, directly reducing M1. US M1 fell from its $21.5T peak (April 2022) to approximately $18.0T by mid-2023 — a $3.5 trillion contraction representing the largest M1 decline in recorded history. For context on how these rate decisions affected investment and asset markets, see our analysis of global interest rates.
By 2025-2026, the M1 cycle has entered a cautious recovery phase. US M1 has stabilised and begun growing modestly, reaching $18.4T by December 2025 (+2.2% YoY). The Fed began cutting rates in September 2024, reducing borrowing costs and gradually stimulating new deposit creation through bank lending. Eurozone M1 is growing at +4.1% as ECB rate cuts take effect. China's M1 growth remains subdued (+3.8%) amid property sector headwinds, but the PBOC has signalled additional easing to support economic growth. The lesson of 2020-2024 is one of the most important in modern monetary economics: M1 can be expanded with extraordinary speed through digital money creation, but the inflationary and financial stability consequences can persist for years. The financial markets in Germany and across Europe are still pricing in the long-term effects of the 2020-2021 M1 surge through elevated long-term interest rates, tighter credit standards, and recalibrated inflation expectations.
US M1 Money Supply Growth — 2015 to 2026
The following chart illustrates the dramatic trajectory of US M1 over the past decade — the world's most closely watched M1 series. Note the discontinuity in May 2020 when the Fed redefined M1 to include savings deposits: this creates an apparent vertical surge that partly reflects the definitional change and partly reflects genuine stimulus-driven money creation. The subsequent peak in 2021-2022, post-peak contraction through 2023, and gradual recovery to late-2025 levels are all visible in this data, providing a clear visual narrative of the most consequential monetary policy cycle in modern history.
Global M1 Components — What Makes Up $50 Trillion
The internal structure of global M1 reveals how modern money actually circulates. Demand deposits — the balances in checking and current accounts that power the digital payments economy — dominate at approximately $36 trillion (72%) of global M1. Physical currency in circulation follows at approximately $9 trillion (18%), comprising the coins and banknotes that remain essential for informal transactions, unbanked populations, and economies with limited digital payment infrastructure. Other checkable deposits (NOW accounts, ATS accounts, and similar instruments) contribute approximately $4 trillion (8%), while traveller's checks and other minor components account for the remaining $1 trillion (2%). This breakdown underscores why central banks can influence M1 so powerfully through digital mechanisms: 82% of M1 is already digital, meaning policy changes are transmitted through the banking system with near-instantaneous speed.
In May 2020, the Federal Reserve redefined M1 to include savings deposits — increasing the US M1 figure by approximately $11-12 trillion in a single statistical release, the largest single definitional change in the history of monetary aggregates. Combined with genuine pandemic-stimulus-driven money creation, US M1 went from $4T (old definition, early 2020) to $20.5T (new definition, late 2021) — a 413% nominal increase. The Fed's rationale was sound: with savings accounts now offering instant digital transfers, there was no meaningful liquidity distinction from demand deposits. But the change fundamentally altered the informational value of US M1 as a monetary indicator. Analysts must now maintain two series — pre- and post-reclassification — to make meaningful historical comparisons.
M1 vs M2 — Ratio Analysis, Country Comparisons & Policy Implications
The relationship between M1 and M2 — measured by the M1/M2 ratio — is one of the most insightful metrics in monetary economics. A high M1/M2 ratio (close to 1.0) indicates that most money is held in instantly liquid form, suggesting high consumer confidence and willingness to keep funds readily available for spending. A low M1/M2 ratio indicates that most money is held in less-liquid savings instruments, suggesting either risk aversion (people saving more), high interest rates (incentivising savings over demand deposits), or structural features of the banking system. The United States has the world's highest M1/M2 ratio at approximately 0.82 (reflecting the 2020 inclusion of savings in M1), which complicates cross-country comparisons. Japan's ratio is approximately 0.68, the UK 0.49, the Eurozone 0.58, and China just 0.31 — meaning Chinese depositors hold the largest share of their money in less-liquid M2 instruments relative to instantly spendable M1.
The global M1-to-GDP ratio is another critical metric for assessing monetary conditions. When M1 grows faster than GDP, it suggests monetary accommodation — more money circulating relative to economic output — which can stimulate growth but also risk inflation if sustained. The US M1/GDP ratio surged to approximately 95% in 2021 (from ~20% in 2019 under the old definition), reflecting the extraordinary stimulus-driven M1 expansion. Japan's M1/GDP ratio of approximately 121% is the world's highest among major economies, reflecting four decades of ultra-accommodative monetary policy under which the Bank of Japan has kept rates near or below zero and maintained massive asset purchase programs. This persistent monetary accommodation has kept Japanese M1 elevated relative to GDP without producing significant inflation — a phenomenon that challenges standard monetary transmission theory and has fascinated economists globally. The interaction between M1 velocity, interest rates, and inflation is central to understanding the Nasdaq stock market and broader equity valuations globally.
The velocity of M1 — calculated as nominal GDP divided by M1 — measures how efficiently money circulates through the economy. Higher velocity means each dollar of M1 supports more economic activity. US M1 velocity peaked at approximately 10.7 in the mid-1990s during the dot-com boom, when a lean M1 (under the old definition) supported a rapidly expanding economy. By 2021, M1 velocity had collapsed to approximately 1.3 — a 88% decline — as the vastly expanded post-reclassification M1 and reduced velocity of pandemic-era savings dramatically reduced the economic output generated per dollar of M1. This "velocity collapse" partially explains why the massive 2020-2021 M1 expansion did not immediately translate into proportional inflation: much of the new M1 sat idle in accounts rather than circulating. As the economy normalised and consumers began spending their accumulated savings, M1 velocity gradually recovered — and inflation followed. The development of AI-powered financial technology is expected to increase M1 velocity further in coming years, as machine learning optimises cash deployment and reduces idle balances in the financial system.
M1 vs M2 by Major Economy — Side-by-Side Comparison
The grouped bar chart below compares M1 and M2 levels for the world's six largest monetary economies, illustrating the gap between instantly liquid money (M1) and total broad money (M2). The enormous M1/M2 disparity in China ($14.2T vs $45.7T) contrasts sharply with the US pattern ($18.4T vs $22.4T) — a direct reflection of China's high household saving rate, preference for longer-term deposits and wealth management products, and the massive scale of China's state-directed bank lending that creates M2 deposits without proportionally expanding M1.
Note: US M1 includes savings deposits per Fed 2020 reclassification. All values in USD at 2025 average exchange rates.
Global M1 Composition — Demand Deposits vs Currency vs Other
The navy donut chart below visualises the internal composition of global M1, reinforcing the key finding that demand deposits — digital bank balances — dominate the world's instantly spendable money supply. Physical currency represents just 18%, a share that has been declining consistently for decades as digital payment adoption expands globally. China's digital yuan (e-CNY), now integrated into official M0/M1 statistics, represents the leading edge of central bank digital currency (CBDC) adoption, with 13.61 billion digital yuan in circulation. If major CBDCs achieve mass adoption by 2028, the "currency in circulation" component of M1 could decline to as low as 10-12% of the total — a historic shift in the physical composition of money.
M1 Country Comparison — Full Data Table
The sortable table below provides comprehensive M1 data for the world's major monetary economies, including M1 value in USD, M1-to-GDP ratio (a measure of monetary accommodation), year-over-year M1 growth rate, corresponding M2 for comparison, and the M1/M2 ratio (measuring the liquidity preference of each economy's depositors). Click any column header to sort the data. Countries with high M1/GDP ratios (Japan: 121%, US: 63%, Eurozone: 68%) are running more accommodative monetary conditions relative to economic output, while countries with low M1/GDP ratios (India: 18%, Brazil: 24%) reflect less financially developed banking systems or tighter monetary conditions.
| Country / Zone | M1 (USD) | M1/GDP % | YoY Growth | M2 (USD) | M1/M2 Ratio |
|---|---|---|---|---|---|
| United States | $18.4T | 63% | +2.2% | $22.4T | 0.82 |
| China | $14.2T | 73% | +3.8% | $45.7T | 0.31 |
| Eurozone | $10.7T | 68% | +4.1% | $18.6T | 0.58 |
| Japan | $5.8T | 121% | +2.0% | $8.5T | 0.68 |
| United Kingdom | $1.9T | 67% | +3.1% | $3.9T | 0.49 |
| Canada | $1.2T | 57% | +2.8% | $1.8T | 0.67 |
| India | $0.8T | 18% | +8.2% | $3.5T | 0.23 |
| Australia | $0.7T | 42% | +3.5% | $1.2T | 0.58 |
| Brazil | $0.5T | 24% | +6.1% | $2.3T | 0.22 |
| South Korea | $0.4T | 23% | +4.4% | $2.1T | 0.19 |
| Switzerland | $0.9T | 110% | +2.5% | $1.4T | 0.64 |
| Mexico | $0.3T | 19% | +5.8% | $0.7T | 0.43 |
Global M1 Money Supply — Key Statistics at a Glance
M1 Forecast 2028 — $58-65T Global, CBDC Integration, Digital Expansion
Looking toward 2028, global M1 is projected to reach approximately $58-65 trillion, driven by a combination of ongoing credit creation in developing economies, continued central bank easing cycles in developed markets, and the structural digitalisation of payment systems that progressively converts cash transactions into demand deposit activity. The most conservative scenario ($58T) assumes continued monetary tightening and disciplined credit standards globally; the most expansive scenario ($65T) reflects a scenario where Fed, ECB, and PBOC all move to more accommodative stances simultaneously, triggering a synchronised global credit expansion. The base case of approximately $62T implies average annual M1 growth of approximately 7-8% from current levels — consistent with nominal GDP growth plus ongoing financial deepening in emerging markets.
The most transformative structural development affecting M1 by 2028 will be the broader adoption of Central Bank Digital Currencies (CBDCs). China's digital yuan (e-CNY) is already operational and counted in official M0 and M1 statistics. The European Central Bank's digital euro is expected to launch in a limited form by 2026-2027. The Bank of England's "digital pound" consultation has yielded a design blueprint, with potential issuance post-2027. If these major CBDCs achieve retail adoption by 2028, they will fundamentally alter the composition of M1: the "currency in circulation" component (currently 18%) could shift from being a liability of commercial banks to a direct liability of central banks — bypassing the fractional reserve banking system entirely. This would represent the most significant structural change to M1 since the creation of central banking itself. The implications for fintech in Europe and payment processors are profound: CBDC adoption could disintermediate existing payment infrastructure and dramatically reduce transaction costs.
Frequently Asked Questions — Global M1 Money Supply
M1 money supply is the narrowest broad measure of money that includes all funds immediately available for spending. It consists of currency in circulation (coins and banknotes held by the public), demand deposits (checking accounts at commercial banks), and other checkable deposits such as NOW accounts and ATS accounts. M1 represents the most liquid form of money — every dollar in M1 can be spent instantly without any conversion or waiting period. As of 2026, global M1 stands at approximately $50 trillion, making it the most active component of the broader money supply and a critical indicator for monetary policy.
Global M1 money supply is estimated at approximately $50 trillion as of early 2026. The United States holds the largest national M1 at $18.4 trillion (following the Federal Reserve's 2020 reclassification that added savings deposits). China follows with approximately $14.2 trillion, the Eurozone with $10.7 trillion, Japan at $5.8 trillion, and the United Kingdom at approximately $1.9 trillion. These five economies together account for roughly 85% of tracked global M1. The global figure is growing at approximately 3-4% annually in 2025-2026, following a period of post-pandemic contraction driven by central bank rate hikes.
The United States has the world's largest M1 money supply at approximately $18.4 trillion as of December 2025. However, this figure is significantly inflated by the Federal Reserve's May 2020 decision to reclassify savings deposits (previously counted only in M2) as part of M1. Under the pre-2020 definition, US M1 was only approximately $4 trillion. China has the second-largest M1 at approximately $14.2 trillion, followed by the Eurozone ($10.7T), Japan ($5.8T), and the UK ($1.9T). Without the 2020 US reclassification, China would arguably hold the world's largest M1 in comparable terms.
M1 and M2 are different layers of the money supply defined by liquidity. M1 includes only the most liquid money: currency in circulation and deposits that can be spent immediately (demand deposits, checking accounts). M2 includes everything in M1 plus less-liquid savings instruments: savings deposits, small-denomination time deposits (CDs under $100,000), and retail money market fund balances. M2 is always larger than M1. For example, US M1 is $18.4T while US M2 is $22.4T. Globally, M2 ($98.6T) is nearly double M1 ($50T), with the $48.6T gap representing money held in savings and time deposits that cannot be spent instantly without conversion.
US M1 spiked for two simultaneous reasons in 2020. First, the Federal Reserve redefined M1 in May 2020 to include savings deposits, which had previously been counted only in M2. This definitional change alone added approximately $11-12 trillion to the M1 figure overnight. Second, the COVID-19 pandemic triggered unprecedented fiscal and monetary stimulus — $2+ trillion in direct payments to households, enhanced unemployment benefits, and the Fed's quantitative easing program — which rapidly expanded deposits across the banking system. Together, these factors caused US M1 to surge from approximately $4 trillion (early 2020, old definition) to over $20 trillion by 2021, contributing directly to the subsequent inflation surge of 2021-2023.
Approximately 18% of global M1 consists of physical currency (coins and banknotes in circulation), totalling approximately $9 trillion. The remaining 82% exists as digital bank deposits — primarily demand deposits in checking accounts. In the United States, currency in circulation represents approximately $2.3 trillion of the $18.4 trillion M1, or about 12.5%. In China, currency in circulation (M0) of approximately $1.45 trillion represents about 10% of China's M1. This digital dominance reflects the modern banking reality: most money circulates as electronic entries, and this share is declining further each year as digital payment adoption expands globally. CBDCs will further accelerate this shift.
M1 and inflation have a complex but significant relationship. When M1 grows faster than real economic output (GDP), it can fuel inflation by putting more spending power into the economy than the available supply of goods and services can absorb. This was precisely the dynamic following 2020: US M1 grew by approximately 27% between 2020 and 2021, contributing to the inflation surge that reached 9.1% by June 2022 — the highest in 40 years. However, the relationship is not mechanical: M1 velocity (how quickly money changes hands) also matters critically. If newly created M1 sits idle in bank accounts rather than circulating, its inflationary impact is muted — explaining the delayed inflation response to early 2020 M1 expansion.
With global M1 at approximately $50 trillion and the world population at 8.16 billion, per capita M1 stands at approximately $6,135 — the theoretical equal share of instantly spendable money per person. In practice, per capita M1 varies enormously: US residents average approximately $54,600 per person, Swiss residents approximately $102,000 per person, while the average for India is approximately $560 and Brazil approximately $2,330. These figures reflect both absolute money supply levels and the profound inequality in access to formal banking services — approximately 1.4 billion adults globally remain unbanked and hold little to no M1 in the banking system.
Central banks influence M1 primarily through interest rate policy and reserve requirements. When central banks lower interest rates, borrowing becomes cheaper, banks create more loans (which become deposits, expanding M1), and consumers are incentivised to hold money in liquid demand accounts rather than earning low savings rates. When rates rise, the reverse occurs: the cost of holding demand deposits vs. higher-yielding instruments increases, and lending slows, contracting M1 growth. Reserve requirements — the minimum fraction of deposits banks must hold in reserve — also directly constrain how much new M1 the banking system can create through the money multiplication process. Quantitative easing (asset purchases) injects bank reserves that can multiply into M1 through lending.
In 2026, global M1 is growing modestly at approximately 3-4% annually, following a period of contraction or flat growth in 2022-2023 as major central banks raised interest rates aggressively to combat inflation. The US M1 contracted from its $21.5T peak (2022) to approximately $18T (2023) before recovering to $18.4T in late 2025 (+2.2% YoY). The Eurozone is seeing stronger M1 growth at +4.1% as ECB rate cuts take effect. While India (+8.2%) and Brazil (+6.1%) are seeing faster M1 expansion driven by financial inclusion and credit growth, China's M1 growth (+3.8%) remains moderate amid property sector headwinds and cautious consumer behaviour.
The United States has a larger M1 at $18.4 trillion vs. China's $14.2 trillion as of 2026 — but the comparison is complicated by definitions. US M1 was dramatically inflated by the 2020 reclassification of savings accounts, whereas China's M1 uses a narrower traditional definition. Under comparable pre-2020 US definitions, Chinese M1 would actually exceed US M1 by a significant margin. Furthermore, China's M2 ($45.7T) is more than double US M2 ($22.4T), reflecting enormous total banking deposits. China's low M1/M2 ratio (0.31 vs. US 0.82) suggests Chinese depositors keep a far smaller proportion of their wealth in instantly liquid accounts — preferring longer-term wealth management products and term deposits.
M1 velocity of money measures how many times each dollar in M1 circulates through the economy per year (calculated as nominal GDP ÷ M1). Higher velocity means money is changing hands more frequently, stimulating more economic activity per dollar of money supply. US M1 velocity peaked at approximately 10.7 in the mid-1990s and has since collapsed to approximately 1.3-1.4 following the 2020 reclassification (which dramatically enlarged the denominator). This decline reflects the inclusion of savings deposits — which turn over much more slowly than checking account balances — and the general trend of financial institutions holding larger liquidity buffers. AI-powered treasury management is expected to gradually increase M1 velocity by optimising idle cash deployment.
Primary: Federal Reserve — H.6 Money Stock Measures (M1, M2 weekly release)
Primary: European Central Bank — Monetary Aggregates (M1, M2, M3 Euro Area)
Primary: People's Bank of China — Monthly Monetary Statistics
Primary: Bank of Japan — Money Stock Statistics
Primary: IMF International Financial Statistics — Global Monetary Aggregates
BusinessStats: All country-level M1 comparisons, per-capita calculations, M1/GDP ratios, M1/M2 ratio analysis, historical growth series, and 2028 forecast projections are based on BusinessStats proprietary research combining the above primary central bank sources with CEIC global monetary database, World Bank financial development indicators, and UN Population Prospects 2024.