"Money supply refers to the total amount of money in an economy, and is usually used to measure a country's monetary policy and economic conditions. Among them, M2 is one of the most commonly used indicators of money supply and the most widely used indicator of money supply One, it includes cash in circulation, savings deposits, time deposits, other deposits, and market funds, but does not include money market funds of institutional investors. Its calculation formula is:

M2 = M1 + savings deposits + time deposits + financial institution bonds, etc.

Among them, M1 is money supply in a narrow sense, which only includes cash in circulation and demand deposits.

The growth and changes of M2 have a great impact on the economy and monetary policy. The following are several aspects of the impact of M2 on the economy and monetary policy:

The impact of M2 on inflation: The increase in money supply will lead to inflation, because the increase in money supply will increase the circulation of money, resulting in rising prices. When M2 grows too fast, the central bank may take some measures to control inflation, such as raising interest rates and tightening monetary policy.

The impact of M2 on the bond market: When M2 increases, the funds available in the market also increase, and investors may be more inclined to invest in stocks rather than bonds, resulting in a decline in bond prices in the bond market. On the other hand, if M2 grows too slowly, demand in the bond market may increase, pushing up bond prices.

The effect of M2 on financial markets: When M2 increases, more funds are available in the economy and liquidity in financial markets increases. This can lead to higher prices on the stock market as investors can more easily obtain financing. Likewise, this could lead to higher prices in the real estate market as homebuyers can more easily secure loans.

The impact of M2 on monetary policy: The central bank can affect monetary policy by adjusting M2. If central banks want to stimulate economic growth, they can increase M2 to increase liquidity within the economy. Conversely, if central banks want to control inflation, they can reduce M2, which reduces the money supply. "