M2 money supply is a broad measure of the total amount of money in an economy. It includes M1 (the most liquid money — cash in circulation and demand deposits) plus additional financial assets that can be relatively easily converted to cash, like savings deposits and small time deposits.
M2 components include: M1 money supply (cash held by the public and demand deposits in banks), savings deposits, small-denomination time deposits (fixed deposits), and retail money market mutual funds.
Central banks and economists closely monitor M2 to understand trends in inflation, interest rates, and overall economic activity. Rapid M2 growth often signals increasing economic activity, but if it grows too fast, it can lead to inflation.
In Bangladesh, Bangladesh Bank uses M2 as an important intermediate target for monetary policy. In April 2025, Bangladesh's M2 money supply was approximately 20,979.80 billion taka, about 7.76% higher than the previous year. Bangladesh Bank influences M2 through various policy measures to balance economic growth with inflation control.