The Fed has defined three monetary agregates (M1, M2 and M3) to measure the amount of money circulating in an economy i.e. the overall money supply.

M3 measure of the U.S. money supply consists of M2, plus large-denomination time deposits of $100,000 or more at all depository institutions, term repurchase agreements in amounts of $100,000 or more issued by all depository institutions, certain term Eurodollars (overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom and Canada, and balances in money market mutual funds restricted to institutional investors (money funds with minimum initial investments of $50,000 or more).

Note: the Fed's definition of the money supply includes only what the non-bank sector holds. Thus the reserves of banks, i.e. vault cash and deposits at the Fed, though a part of the monetary base, are not included in the monetary aggregates.

The Fed measures money supply to help guide its monetary policy decisions. Market participants watch for strong growth in the money supply, which might lead to inflationary pressure,s as money inflates aggregate demand.