HOW MUCH MONEY IS IN THE WORLD RIGHT NOW?

Money transformed the entire idea of the barter system. A medium of exchange for centuries, it keeps the world in flow, enables countries to trade, store wealth and foster friendly relationships.

Check Out: 6 Genius Things All Wealthy People Do With Their Money

Typically, every country has a central bank that regulates and manages the money supply, working in coordination with the government. This regulation plays a key role in shaping economic dynamics, including wealth distribution.

In today’s world, income inequality is a defining characteristic of nations, with the financial bar to join the top 1% varying drastically from one country to the next. Below is a look at countries with the highest and lowest income requirements to crack the top 1%, giving a snapshot of how wealth is distributed globally.

Key Takeaways

• The income required to join the top 1% varies widely, with South Sudan at just $24,770 compared to Bermuda’s $9,319,782.
• Among the highest-income large nations, the United States ranks third, with an entry point of $1.83 million to enter the top 1%.
• Notable absences from the list of top 10 countries with populations over 10 million and the highest income requirements include major economies like Germany ($690,606), Canada ($684,560), the UK ($615,480) and China ($449,211).

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Money Supply Types

Economists divide money into categories based primarily on how liquid it is, according to the Federal Reserve Bank of Richmond. The range starts at the narrowest and most liquid with M0 and, in the U.S., goes up to the broadest and least liquid, M3. Each M level includes the levels that precede it, so M3 includes M0, M1 and M2.

The central bank in the U.S. is the Federal Reserve System, which publishes U.S. currency data based on three of the four Ms:

How Money Supply Is Measured

• M0: Referred to as the monetary base, M0 includes all the money in circulation, including money banks hold in reserve. According to the Federal Reserve’s data for July 2024, there was about $2.3 trillion in circulation.
• M1: It includes all the M0 money supply, adding the money held in travelers’ checks, demand deposits, other types of checkable deposits and negotiable orders of withdrawal. As of July 2024, the seasonally adjusted stock of M1 totaled $18.05 trillion.
• M2: It includes all of the currency from the M1 money supply, and expands to include mutual funds, smaller time deposits, money market securities and other types of time deposits. M2 currencies are usually less liquid than M1, meaning you can’t convert M2 money into cash as easily. The total stock of M2 was $21.05 trillion in July.
• M3: It includes all the elements of M2, plus institutional money market funds and large time deposits. As compared to M1 and M2, M3 assets have the lowest liquidity. The Fed no longer calculates M3.

After covering different types of money and how much is circulating and held in the U.S., here’s a look at the important question: “How much money is there in the world?”

How Much Money Is in the World?

The total amount of money in the world can be measured and expressed in many different ways, so it’s difficult to give a specific answer.

Money Supply

If you’re curious about the total value of notes and coins in circulation, the Bank for International Settlements estimated it to be $8,275,000,000,000, or $8.28 trillion U.S. dollars, across 20 major countries plus the euro area in 2021, its most recent estimate. Of course, there are nearly 200 countries in the world, so this is just a rough estimate of the most narrowly defined — and perhaps easiest to quantify — category of money.

The global M1 supply, which includes all the money in circulation plus travelers checks and demand deposits like checking and savings accounts, was $48.9 trillion as of Nov. 28, 2022, according to Visual Capitalist. That publication estimated the total value of the M2 supply to be $82.6 trillion.

Money is also present in the form of investments and derivatives. The total global market capitalization of the world’s roughly 80 major stock exchanges is $110.2 trillion according to Visual Capitalist. The total market cap of cryptocurrency, as reported by CoinMarketCap, adds another $2.08 trillion to that figure.

All combined, the M2 money supply, stock exchange capitalization and cryptocurrency total $194.88 trillion.

Gross Domestic Product

Another way to view global wealth is by gross domestic product, which is the total value of all the goods and services produced and purchased within a given country over the course of a year or other time period.

While GDP measures a nation’s production and tracks its economy’s growth or contraction, the International Monetary Fund notes that GDP has a number of shortcomings, including its failure to measure residents’ standards of living and well-being. One reason is the disparity in GDP distribution — a country’s residents don’t benefit equally from GDP growth.

Human Development Index

The Human Development Index adds context to the GDP and money supply by measuring countries’ longevity and education as well as their income. According to the United Nations Development Programme, the HDI acknowledges that longevity and education are as important to a country’s development as its economic factors.

Where the economic factor is concerned, the HDI measures gross national income instead of GDP because GNI represents what residents earn rather than the value of what they produce.

In 2023, the global gross national income totaled $105.7 trillion, according to the World Bank Group. But just as GDP fails to reflect disparities in the benefits of production, GNI doesn’t reflect income inequality, which is why it’s important to view the figures in the context of the other factors.

How Much Money Is There per Person in the World?

Estimates of how much money there is per person in the world vary widely because of the several different ways to measure it.

Using the Federal Reserve’s $2.3 trillion M0 currency figure and a current world population of 8.17 billion, per Worldometer, there’s about $282 per person in the world, on average. Using the M1 figure, the amount is $2,209. Using the M2 figure, the amount per person is $2,576.

However, not all estimates include every country or every person, and the figures vary widely based on whether they represent average or median wealth.

For example, UBS Wealth Management publishes an annual Global Wealth Report. The 2023 report, which is the most recent containing a global net private wealth estimate, put the average figure at $84,718, but it only counted adults, and it only used figures for the 60 countries with the highest total wealth.

In a report on that data, Visual Capitalist also provided the median amount per adult — $8,654.

As with GDP and GNI, global estimates don’t reflect the enormous disparities in wealth from one country to the next, or from one individual to the next within a given country.

Good To Know

The world’s top 10 billionaires from the Forbes Real-Time Billionaires List have a total net wealth of $1.32 trillion as of Sept. 17.

Future of Money: Is Cash Going to Be Replaced?

With countries striving hard to stabilize their economies, the total amount of money in circulation is expected to increase continuously.

Currently, more people are being drawn towards using virtual or digital currencies. This is why the use of physical money is gradually decreasing with the increased popularity of digital transactions. 

China, Japan and Sweden are in various stages of developing central bank digital currency, according to The New York Times. The Bank of England and the European Central Bank are also exploring CBDCs. The Bahamas has already launched the world’s first official digital currency.

Final Take

There is nearly $21.05 trillion in the total global money supply (M2), $18.05 trillion of which is M1. Even if digital currencies render physical money obsolete, the kinds of currencies central banks are considering would still be quantifiable — just as you can quantify your bank balance or the value of your investment portfolio despite the absence of physical money in those accounts.

Amber Barkley, Elizabeth Constantineau and Daria Uhlig contributed to the reporting for this article.

Information is accurate as of Aug. 12, 2024, and is subject to change.

This article originally appeared on GOBankingRates.com: How Much Money Is in the World Right Now?

2024-03-22T20:27:59Z dg43tfdfdgfd