The monetary economy within a national economy or monetary union like the European Monetary Union (EMU) consists of the broad money supply (M3) of which about 7% is made up of actual bank notes and bank coins - based on the US money supply figures. The monetary economy is made up of money and other monetary items, e.g. bank notes, bank coins, bank loans, bank savings, credit card loans, car loans, home loans, student loans, consumer loans, commercial and government bonds, Treasury Bills, all capital market items, all monetary investments, etc. The monetary economy is the fiat money supply created in the banking system by means of fractional reserve banking. It is notable that Swedish commercial banks are not required to keep reserves with the Riks Bank, the Swedish Central Bank, like commercial banks in the rest of the world.
Bank notes and coins (cash) generally make up only about 7% of the money supply. The other 93% of the money supply is made up of bank money (loan / overdraft / monetary application values in bank accounts) and other monetary items. They are non–cash monetary items. They have exactly the same attributes as physical bank notes and coins except that they are not present as cash. Their real values are being eroded by inflation and hyperinflation and increased by deflation in exactly the same way as with bank notes and coins.
2. Variable item economy
3. Constant item economy
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