Money is anything widely accepted as a medium of exchange, a unit of account, and a store of value. In modern economies, the most important forms are currency and bank deposits.

Most money is not physical cash. It is a liability of a bank or central bank, recorded electronically. Commercial-bank deposits are created when banks lend, which is why the money supply is closely connected to credit creation.[1]

Statistical agencies define money through aggregates such as M1 and M2. The definitions vary by country and change over time.[2]

Sources

  1. Bank of England. Money in the modern economy: an introduction. Bank of England Quarterly Bulletin. 2014. View source Accessed Nov 11, 2026.
  2. International Monetary Fund. Monetary and Financial Statistics Manual. IMF. 2000. View source Accessed Nov 11, 2026.