Have you ever wondered how much money there is in the world?
It's a tricky question because money comes in many forms, from coins jingling in your pocket to paper bills you can hold in your hand.
But guess what?
Money isn't just about the physical stuff anymore. In today's digital age, money can also be those numbers on your computer screen that you use to buy things online or the virtual currencies that are making waves, like Bitcoin.
So trying to put a true figure on the question isn't easy. There are many factors to consider.
In this insight, we tackle the question of how much money there is in the world, and why it's a ticking timebomb for the global economies.
It has been reported that there is £30.7 trillion worth of money in the world. However, with all the money that is not able to be tracked, it is estimated that the true figure is closer to £70 Trillion, and when you include Cryptocurrencies the figure is almost £1Quadrillion.
Money isn't just notes and coins – it comes in various forms. Let's break it down into two main types: Narrow Money (M0) and Broad Money.
Imagine M0 as the most easily spendable kind of money. It includes actual physical cash like coins and banknotes.
But there's more – it also counts the balances you have in your checking and savings accounts.
Even though these account balances aren't physical money, they're like secret codes that help you do digital transactions.
In 2023, a report told us that the total M0 circulating around the world is about $30.7 trillion. That's a lot of money!
Now, let's look at the bigger picture. Broad money takes everything from narrow money and adds something extra. It includes things that might not be as easy to spend quickly, but they can still be used as a way to pay for stuff.
So, when we talk about how much money there is, we're not just thinking about notes and coins. We're also counting those digital numbers in your bank account and other things that work like money, even if they're not cash you can hold.
Understanding these money types helps us unravel the mystery of the world's wealth. It's like knowing the different pieces of a puzzle that make up the big picture of money all around us.
Cryptocurrencies add another twist to this mix. They're like a new kind of Broad Money, but purely digital. You can't touch them, but they can be spent online just like any other money.
The control of money in the world is not centralised under a single authority. Instead, it involves a complex network of institutions, governments, central banks, and financial systems that collectively influence and manage the money supply. Here's a breakdown:
In most countries, central banks have a significant role in controlling the money supply. They regulate the issuance of physical currency, set interest rates, and implement monetary policies to maintain economic stability.
Examples include the Federal Reserve in the United States, the European Central Bank in the Eurozone, and the Bank of England in the United Kingdom.
National governments have authority over their currency and often work closely with their central banks to manage economic policy. They can influence money supply through fiscal policies like taxation and government spending.
Commercial banks play a crucial role in the money creation process. Through fractional reserve banking, they lend out a portion of the deposits they receive, effectively creating new money in the form of loans.
The IMF oversees the global monetary system and offers financial assistance to countries in need. It provides a forum for cooperation and exchange rate stability but doesn't directly control global money.
Financial markets, including stock markets, bond markets, and foreign exchange markets, collectively influence the flow of money by facilitating investment, borrowing, and trading of financial instruments.
The interconnectedness of the global financial system means that actions taken by individual countries and financial institutions can have ripple effects across borders, affecting the flow of money and currencies.
While not controlled by a central authority, cryptocurrencies like Bitcoin have introduced a new form of decentralised digital money. The control and governance of cryptocurrencies are distributed among their user communities and the underlying blockchain technology.
Regrettably, the distribution of money worldwide is anything but even. There's a noticeable gap between the haves and the have-nots. For instance, countries like the United States have a high GDP per person, while places like the Democratic Republic of Congo are far less fortunate.
This unevenness stems from factors such as past colonial rule, the availability of resources, and the economic rules each country follows.
To calculate how much money per person there is in the world, we can divide the total amount of money (£30.7 trillion) by the total global population (7.888 billion):
So, if there is £30.7 trillion in the world and a global population of 7.888 billion people, there would be approximately £3,889.45 per person.
To calculate how much money per person there is in the world, we can divide the total amount of money (approximately $37.474 trillion USD) by the total global population (7.888 billion):
Total money / Total population = Money per person $37.474 trillion / 7.888 billion = approximately $4,747.16 USD per person."
Billions of pounds move through the global economy, exchanged between individuals, businesses, and governments. While pinpointing the precise daily spending is tricky, economists estimate it at about £3.5-£4 trillion.
This massive flow includes personal expenses, business investments, and government spending for infrastructure and defence. Even Though the exact figures might be a challenge, there's no denying the enormous economic whirlwind that takes place each day.
It has been reported that there is approximately $37.474 trillion worth of money in the world in various forms. However, when accounting for all the money that cannot be easily tracked, the estimated figure is closer to $85.4 trillion.
This estimation includes traditional forms of money as well as cryptocurrencies, bringing the total to almost $1.22 quadrillion.
There are major concerns about inflation, asset bubbles, currency devaluation, debt, and central bank policies. Excessive money creation may lead to economic instability, affecting purchasing power, asset values, and national debt levels. It's important to implement prudent economic management.
Solving the puzzle of how much money is in the world is no small task. The global financial landscape is complex and ever-changing, involving a range of assets from physical cash to digital currencies and intricate financial instruments.
While pinpointing exact numbers might be a challenge, financial reports offer valuable insights into the global money supply. As our world becomes more digital, our understanding of money's diverse forms continues to evolve, reshaping our answer to this fundamental question.
The financial journey is ongoing, and our exploration of its depths is a testament to the dynamic nature of the financial world.
Stuart is an expert in Property, Money, Banking & Finance, having worked in retail and investment banking for 10+ years before founding Sunny Avenue. Stuart has spent his career studying finance. He holds qualifications in financial studies, mortgage advice & practice, banking operations, dealing & financial markets, derivatives, securities & investments.
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