Are Large Time Deposits M1 Or M2? | The Money-Bucket Reality

No, large time deposits usually sit outside M1 and M2; in U.S. reporting, they’re tracked separately from M2’s small time deposits.

If you’ve ever pulled up money-supply charts and wondered where big CDs and big time deposits land, you’re not alone. The names sound simple—M1, M2—yet the lines on the map depend on the rules of the specific country and the reporting agency.

This article clears up the bucket your “large time deposit” goes into, why that answer can change by definition, and how to read money data without getting tripped up by labels. You’ll leave with a clean mental model, a practical checklist, and a couple of fast ways to verify what a dataset includes.

What M1 And M2 Mean In Plain English

Monetary aggregates are grouped by how spendable the funds are. Spendable means you can pay a bill with it right now, with no waiting period and no penalties. Less spendable means you can turn it into spendable money soon, yet there’s friction like time locks, notice periods, or early-withdrawal penalties.

How M1 Earns Its Spot

M1 is the “ready-to-spend” pile. In the U.S., that’s currency held by the public plus transaction deposits (think checking balances and other deposits you can use right away). The Federal Reserve’s own FAQ lays out that idea directly in its explanation of what the money supply is and how M1 is built from currency and transaction deposits. Federal Reserve money supply FAQ

So, if you can swipe a card, send an ACH transfer, write a check, or pay a bill directly from the account without special steps, you’re in M1 territory in most systems.

How M2 Expands The Net

M2 is broader. It starts with M1 and adds “near-money”—balances that are not used as the day-to-day payment rail, yet can be converted to spendable funds with a small bit of friction. In U.S. reporting, M2 includes M1 plus small-denomination time deposits and retail money market funds (with some retirement-account adjustments). That definition is stated in the Federal Reserve’s H.6 release notes. Federal Reserve H.6 money stock measures

That last line matters. The U.S. definition points at small time deposits, not large ones. So if your question is about U.S. aggregates, you’re already close to the answer.

Are Large Time Deposits M1 Or M2?

In the U.S. framework used by the Federal Reserve’s money stock measures, “large time deposits” are not part of M1. They are not part of M2 either. M2 explicitly pulls in small-denomination time deposits, not large-denomination time deposits. The H.6 release explains what M2 includes, and the companion M2 series documentation repeats the same definition. FRED series notes for M2 (M2SL)

That can feel odd at first. A time deposit is still money you own at a bank. Yet money aggregates are not a “net worth” statement. They’re a liquidity map. A big time deposit is less “money you can spend today” and more “a time-locked claim you can convert under rules.” That is why it lands outside the two narrow buckets most people watch.

What Counts As A “Large Time Deposit” In Practice

In everyday banking, large time deposits are usually large-denomination certificates of deposit (CDs) and other time deposits above a threshold used in reporting. In U.S. discussions, you’ll often see the $100,000 line as the split between small and large time deposits in older monetary-aggregate conventions and bank reporting categories. The exact threshold and series labels can differ across datasets and time periods, so you always want to check the notes attached to the series you’re using.

Here’s the plain reading: if the deposit is time-locked, not used for transactions, and big enough to fall into “large” reporting categories, it behaves like a funding instrument more than a wallet balance. That’s the liquidity logic behind its placement.

Large Time Deposits In M2: Where They Fit And Why The Label Trips People

The phrase “time deposits are in M2” is half-true in U.S. reporting. It’s true for small-denomination time deposits. It’s not true for large-denomination time deposits. That’s why the question pops up so often—people learn the broad rule, then encounter a large CD and try to place it using the same shortcut.

To keep it clean, treat M2 as “M1 plus near-money that’s still aimed at households.” A big time deposit is often held by firms, institutions, or wealthy depositors, and it often trades or rolls in ways that act more like wholesale funding. That nudges it out of M2 in the U.S. setup.

Why The U.S. Focus Matters

Countries do not all define M1 and M2 the same way. A useful contrast is the euro area, where the European Central Bank defines M1 as currency plus overnight deposits, and M2 as M1 plus deposits with agreed maturity up to two years and deposits redeemable at notice up to three months. That’s a different boundary line than the U.S. line, even if the names look identical. ECB monetary aggregates definitions

So, if you’re asking “Are large time deposits M1 or M2?” without naming a country, the safest answer is: it depends on the definition used by the reporting authority. If your charts come from U.S. sources like the Federal Reserve H.6 release or the standard FRED M2 series, large time deposits sit outside both M1 and M2.

How This Shows Up In Real Data Work

You might be doing one of these tasks:

• Comparing “money growth” to inflation or GDP.
• Estimating how much purchasing power is available for near-term spending.
• Building a model that uses M2 as a liquidity proxy.
• Reconciling bank funding categories with money aggregates.

In each case, mixing in large time deposits as if they were part of M2 can distort the story. You’d be blending retail-adjacent balances with wholesale-style deposits. That can change volatility, seasonality, and sensitivity to rate moves.

What Makes A Deposit “Money” In These Buckets

If you want a rule that works even when labels shift, use access friction. Ask: “How many steps does it take to spend this balance?” Then ask: “Do those steps come with timing rules or penalties?”

Transaction Access: The M1 Test

A balance belongs near M1 if it can settle payments directly. Checking balances, debit-card-linked balances, and other transaction deposits pass that test. A time deposit fails it because you can’t pay a bill from a time deposit without breaking the term or moving funds out first.

Conversion Access: The M2 Test

A balance belongs near M2 if you can convert it into transaction money with modest friction. Savings deposits often fit that idea. Retail money market funds can fit it, depending on the system. Small time deposits can fit it in the U.S. setup, as described in official series notes for M2. FRED series notes for M2 (M2SL)

Large time deposits often fail the “modest friction” feel for typical households because the size and use case tend to be different, and the market behavior is different.

Money-Bucket Map For Common Deposit Types

Use this table as a quick map when you’re sorting balances. This is written with U.S. H.6-style definitions in mind, since that’s where the “large time deposit” confusion shows up most.

Instrument	How You Access It	Where It Lands (U.S. H.6 Style)
Cash (currency held by the public)	Spend directly	M1 (and inside M2)
Checking / transaction deposits	Spend directly	M1 (and inside M2)
Other very liquid deposits tied to transactions	Spend directly or with one step	M1 (and inside M2)
Savings deposits	Transfer to checking, then spend	Counted within M1 in U.S. since 2020; still inside M2
Small-denomination time deposits	Wait to maturity or withdraw early with penalty	Included in M2 (not in M1)
Retail money market funds	Convert to spendable money with steps	Included in M2 (not in M1)
Large time deposits (large CDs)	Time-locked; may behave like wholesale funding	Outside M1 and outside M2 in U.S. money stock measures
Institutional money market funds	Often used by firms; different behavior than retail MMFs	Outside M2 in U.S. money stock measures

Why Large Time Deposits Sit Outside M1 And M2 In U.S. Reporting

The U.S. M2 definition is explicit: it adds small-denomination time deposits and retail money market funds to M1. It does not state that large time deposits are included. That’s not an accident. It’s a choice about what M2 is meant to represent: liquid money and near-money held in forms that track household and small-saver behavior more closely.

Size Changes Behavior

As deposit sizes rise, the holders and motivations can change. A household might place savings into a small CD for a predictable return. A firm might place cash into large time deposits as part of treasury management. Those flows can react differently to rate moves, risk events, and cash-management cycles.

So, putting large time deposits into the same bucket as household-adjacent near-money can blur the meaning of the aggregate.

The “M3 Memory” That Causes Confusion

Many people learned older “M3 includes large time deposits” phrasing from textbooks, older data series, or older commentary. The Federal Reserve stopped publishing M3 years ago, but the mental model stuck. When you’ve got that model in your head, it’s natural to ask where large time deposits went.

The clean answer is: in U.S. data work, they often show up in separate bank-series categories or discontinued legacy series, not inside M2.

How To Verify A Money Aggregate In Less Than Two Minutes

If you’re reading someone else’s chart, don’t rely on their label. Verify the definition in the source notes. This saves you from building a conclusion on a mismatch.

Step 1: Find The Series Notes

On many data portals, the series notes spell out the components. In U.S. work, the Federal Reserve H.6 release and the standard M2 series notes lay out the construction of M2 clearly. Federal Reserve H.6 money stock measures

Step 2: Check Whether “Small” Or “Large” Is Named

If the definition says “small-denomination time deposits,” treat that as a hard boundary. Don’t assume “time deposits” means all time deposits. If the definition doesn’t mention large time deposits, don’t add them in your head.

Step 3: Confirm The Geography

If the chart is euro area money, the ECB definitions use a maturity-and-notice structure rather than the U.S. small/large convention. That can make “time deposit” coverage look different even when the label says M2. ECB monetary aggregates definitions

Step 4: Match Your Question To The Right Aggregate

Ask what you’re trying to measure:

• If you care about immediate spending power, track M1-style measures.
• If you care about spendable-plus-near-spendable balances, track M2-style measures.
• If you care about broader bank funding and large deposit behavior, pull bank-series data that explicitly includes large time deposits.

Where To Find Large Time Deposits If They’re Not In M2

In the U.S., large time deposits can be tracked through bank balance-sheet series rather than money stock aggregates. One widely used public series is “Large Time Deposits, All Commercial Banks” on FRED, sourced from the Board of Governors. That series is not M1 or M2; it’s a direct measure of large time deposits in the banking system. FRED series for Large Time Deposits (LTDACBW027NBOG)

This is a practical way to keep your models honest: use M2 for what M2 is meant to capture, and use a dedicated series for large time deposits when that behavior is part of your story.

Quick Decisions When You’re Classifying A Time Deposit

Use the table below as a “classification gate.” It’s written to reduce mistakes when you’re switching between money aggregates and bank-series reporting.

Question To Ask	If The Answer Is “Yes”	What To Pull In Data
Can it settle payments directly today?	It’s transaction money	M1-style measure (per your authority’s definition)
Is it a time deposit with a small-denomination label in the series notes?	It’s near-money in U.S. M2	M2 series that names small time deposits in its notes
Does the source explicitly name large time deposits or large CDs?	It’s tracked as a separate category	Bank series like “Large Time Deposits”
Are you using euro area definitions?	M2 depends on maturity/notice rules	ECB aggregates with maturity/notice breakdown
Are you mixing sources across countries?	Names can mismatch across systems	Use each authority’s definition page before comparing

Practical Takeaways For Reading Money Data

If you only remember a few lines, make them these:

• Large time deposits are not M1 in the U.S. setup.
• In U.S. money stock measures, M2 includes small-denomination time deposits, not large ones.
• If you want large time deposits in your work, pull a series that names them directly rather than forcing them into M2.
• Always verify the definition notes, since M1 and M2 are labels that vary by authority.

That’s the money-bucket reality. Once you treat these aggregates as liquidity buckets with written rules, the confusion fades fast.