The money supply

The monetary aggregates play a central role in the formulation of monetary policy in the United Kingdom: since 1976 there have been published targets (latterly monitoring ranges) for the growth of the money supply. In the course of this period the monetary aggregates have been used both as intermediary targets, that is they were treated as providing the link between changes in monetary instruments (interest rates) and developments in the final economic variable (nominal income) and more recently as timely indicators of developments in nominal income which would otherwise only become apparent after additional delays. There is no single correct definition of money. Besides the published aggregates, other liquid assets, and access to borrowing facilities, may need to be taken into account when interpreting monetary conditions.