- There is approximately US $37 trillion in circulation: this includes all the physical money and the money deposited in savings and checking accounts.
- Money in the form of investments, derivatives, and cryptocurrencies exceeds $1.2 quadrillion.
Money is the medium of exchange for goods and services. It doesn’t literally make the world go around, but economies of countries rely on the exchange of money for products and services.
Money supply data is usually analyzed and published by the government or the central bank of the country. Since it is present in various forms (virtual and physical) in different currencies, it’s extremely difficult to determine the exact total amount.
To make things easier, we have converted currencies into the US dollar. And since the U.S statistics are easily available, we can examine this question in different ways.
Different Types of Money
Typically, different types of money are classified as “M”s. They range from M0 (narrowest) to M3 (broadest), depending on the policy formulation of the country’s central bank.
The Federal Reserve System — central bank of the United States of America — for instance, publishes data on three monetary:
M0: All physical currency in circulation, including coins, notes, and bills, is called M0 money.
M1: includes all of the currency in the M0 money supply, plus all of the money held in demand deposits, travelers checks, other checkable deposits, and negotiable order of withdrawal. Basically, M1 money contains currency and assets that can be rapidly converted into cash.
M2: includes all elements of M1, plus saving deposits, mutual funds, money market securities, and other time deposits. Usually, these assets are used as an exchange medium and are less liquid than M1.
M3: is M2 plus large certificates of deposits, institutional money market funds, and short-term repurchase agreements. These assets are less liquid than other elements of the money supply.
The Federal Reserve System doesn’t track M3 money since 2006, because all valuable information on economic activity is already available in the M2 money supply.
So How Much Money Is Out There?
As of January 31, 2019, there was nearly US $1.7 trillion in circulation, including Federal Reserve notes, coins, and currency no longer issued.
If you are looking for all the physical money (notes and coins) and the money deposited in savings and checking accounts, you could expect to find approximately $37 trillion. This figure represents only ‘narrow money’.
However, if you add the ‘broad money’, the amount rises to over $90.4 trillion. This amount further increases when bitcoins and other cryptocurrencies are included.
Money in the form of investments, derivatives, and cryptocurrencies exceeds $1.2 quadrillion. This is what it looks like written out: $1,200,000,000,000,000.
This is a much more significant amount compared to the total money in the stock market, which is a mere $74 trillion. Leading tech companies such as Apple, Alphabet, Microsoft, and Amazon contribute a lot in the stock market.
The value of all cryptocurrencies in circulation ($260 billion) and investment in commercial real estate ($30 trillion) also represent a small portion of the total money in the world.
In the 2019 list of world’s billionaires, Forbes included 2,153 billionaires with a total net wealth of $8.7 trillion. Surprisingly, the top 26 billionaires own as much as the poorest 3.8 billion.
According to the Central Intelligence Agency, in 2017, the gross world product (combined gross national product of all countries) totaled $127.8 trillion in terms of purchasing power parity.
Future Of the Money
The total quantity of money in circulation will increase in the future as more investments flow-in, and developing countries stabilize their economies.
Nowadays, the use of physical money is reducing, and transactions are becoming more digital. As digital payments increase in popularity, the amount of physical money is likely to fall even further.
In Sweden, for instance, only 20% of all transactions are now made in cash. Sweden’s national bank estimates that the amount of physical money circulating in the country will be reduced by 50% by 2050.
Whichever way you look at it, counting up the exact amount is next to impossible. There is no precise way to answer this question. How can you quantify something that changes in value, not just in terms of currency rates but also in meaning?