| Definition |
Total amount of money available in the economy, including cash and deposits. |
Total amount of funds available for borrowing in the economy, including loans and credit facilities. |
| Components |
Currency in circulation, demand deposits, savings, and time deposits (M1, M2, etc.). |
Bank loans, advances, credit cards, overdrafts, and other lending products. |
| Nature |
Actual liquidity held or readily available. |
Debt-based funding that creates future repayment obligations. |
| Controlled By |
Primarily controlled by the central bank through monetary policy tools. |
Controlled by commercial banks, financial institutions, and credit markets. |
| Impact on Economy |
Influences inflation, purchasing power, and liquidity in the market. |
Drives economic growth through business expansion and consumption. |
| Interest Involvement |
No interest involved in holding money itself. |
Always involves interest or repayment obligations. |
| Expansion |
Expanded through printing money or increasing reserves. |
Expanded through lending by banks and credit institutions. |
| Risk |
Lower risk; directly usable for transactions. |
Higher risk; includes credit defaults and repayment delays. |
| Example |
Cash in hand, bank account balances. |
Home loans, car loans, business credit lines. |
money supply vs credit supply
