Money & Finance › The Fed, money supply & inflation › The money supply: M0, M1, M2 and M3
M0, the monetary base: currency plus bank reserves
· Concept
Fact, law or dataA rule, statute, definition or measured number.
The monetary base, or M0, is all paper currency and coins plus the reserves banks hold at the Fed.
See it on the Money & Finance map →How it works
This is the money the Fed creates directly: ordering notes from the Bureau of Engraving and Printing, and crediting reserve accounts when it buys bonds. Textbooks once taught that banks lend out a fixed multiple of it. After 2008 that broke down: QE swelled the base from under $1 trillion to about $4 trillion by 2014, and past $6 trillion in 2021, while broad money grew far less. It was roughly $5–6 trillion in 2025, about $2.4 trillion of it currency.
Why it matters
It is the Fed's direct footprint. Its post-2008 surge without runaway inflation showed reserves parked at the Fed are not the same as money being spent.
Facts, rules and data
The Fed's weekly H.4.1 balance-sheet report lists currency and reserves; FRED's monetary base series runs back to 1959.
Debates and risks
The textbook 'money multiplier' is now widely seen as misleading; how reserves and bank lending interact is still argued.
Connections (4)
▸The Fed's balance sheet and quantitative tightening (QT) is mirrored in M0, the monetary base: currency plus bank reservesFact, law or data
The connection
The monetary base, currency plus bank reserves, makes up most of the liability side of the Fed's balance sheet. When the Fed buys bonds it creates reserves, so the base grows; under QT reserves drain and the base shrinks. The base rose from about $0.8 trillion in 2007 to over $6 trillion in 2021.
When and why
Fed balance-sheet data since 1914; the St. Louis Fed charts the monetary base back to 1959.
How we know
It is accounting: the Fed's assets equal its liabilities plus capital, and currency and reserves are most of those liabilities.
Debates and risks
A far bigger base after 2008 did not bring the inflation monetarists expected, because banks held reserves idle; whether 2020 was different is debated.
▸M0, the monetary base: currency plus bank reserves is the narrowest measure of The money supply: M0, M1, M2 and M3Fact, law or data
The connection
The monetary base is the money the Fed creates directly: currency and bank reserves. Broader measures build on it as banks lend and create deposits. It is the narrowest measure, though reserves are left out of M1 and M2, which count only money held by the public.
When and why
US; tracked on the Fed's balance sheet since 1914, and called 'high-powered money' by Friedman and Schwartz in 1963.
How we know
Currency and reserves are liabilities on the Fed's own balance sheet, reported weekly in the H.4.1 release.
Debates and risks
How tightly the base drives broad money is disputed: after 2008 it roughly quadrupled while M2 grew modestly.
▸M0, the monetary base: currency plus bank reserves includes reserves once governed by Reserve requirements (cut to zero in 2020)Fact, law or data
The connection
The monetary base is currency plus banks' reserve balances at the Fed. Reserve requirements once set a floor on those balances relative to deposits, linking the base to the money supply. With requirements at zero since 2020, reserves are held voluntarily, and their size mostly reflects the Fed's bond buying.
When and why
Requirements ran from the National Bank Act of 1863 to March 2020. Reserves were about $3 trillion in 2025, versus well under $100 billion before 2008.
How we know
The Fed's weekly H.4.1 balance sheet reports reserve balances; its discontinued H.3 release once tracked required reserves.
Debates and risks
How many reserves the system actually needs, the 'ample' level, is unknown; the 2019 repo spike showed the Fed had underestimated it.
▸Bureau of Engraving and Printing and the US Mint make the cash counted in M0, the monetary base: currency plus bank reservesFact, law or data
The connection
The Bureau of Engraving and Printing prints Federal Reserve notes to the Fed's order, and the Mint strikes coins. When banks need cash, the Fed ships currency and debits their reserves, so currency is the part of the base the public can hold. About $2.4 trillion circulates.
When and why
The Mint was founded in Philadelphia in 1792; the BEP dates from 1862 and prints in Washington, DC and Fort Worth, Texas.
How we know
The Fed's annual currency budget and print order, published each year, and BEP production reports.
Debates and risks
Cash use for payments is falling, yet currency outstanding keeps growing, much of it $100 bills held abroad; the overseas share is only an estimate.