The money supply

Trend in money supply

As Guyana celebrates its Golden Jubilee, it is perhaps good to talk about something that is on their minds.  No doubt lots of money will be spent during this period of festivity.  It is perhaps a good time to take a look at how the money supply behaves.  This article is interested therefore in the trend in the money supply over the last 10 years.

Three levels

20150920lucas business  page newThe money supply of a country consists of the stock of currency and other short-term or liquid assets in the financial system.  The money supply always starts from a monetary base and then increases as other forms of money enter the picture.  It is no exception in the case of Guyana.  A perusal of the Annual Report of the Bank of Guyana reveals that the money in Guyana consists of three levels.  The first or base level is known as reserve money.  It is often depicted with the symbol M0.  The second level is described as M1 and the next level is referred to as M2.  The three levels reveal an important thing about the Guyana economy and that is a limited range of items is considered money…..