Banking
M0, M1, and M2 — The Numbers That Reveal the True Face of Any Economy
M0, M1, and M2 are three layers of money supply that reveal how much 'real' money exists in an economy versus how much has been created by banks through lending. M0 is physical currency printed by the central bank — the only 'real' money. As M1 and M2 grow larger relative to M0, it means banks have created more debt-based money. In advanced economies, bank-created money is 89-97% of the total. Bangladesh's M2/M0 ratio of 4.45x and M2/GDP ratio of just 34% tell a story of both underdevelopment and fragility, worsened by high non-performing loans.
Mar 20, 2026
