Quasi money is a component of the money supply made up of time deposits, savings deposits, and foreign currency demand deposits held by the domestic private sector. In Bank Indonesia's monetary statistics, quasi money is part of M2, also called broad money. Understanding quasi money helps you read the direction of liquidity, interest rates, and central bank policy. This term also appears when analyzing fund flows around crypto trading.
Key Points
- Definition: Quasi money covers time deposits, savings, and foreign currency demand deposits in M2.
- Function: Quasi money works as a liquidity indicator and an economic activity signal.
- Difference: M1 excludes quasi money, while M2 includes it.
- Impact: Bank Indonesia's interest rate moves affect quasi money through bank deposits.
- Risk: Quasi money cannot be spent directly and requires withdrawal or conversion.
What Is Quasi Money?
Quasi money is near money that cannot be directly used as a payment tool. It takes the form of time deposits, savings deposits, and foreign currency demand deposits owned by the domestic private sector. According to Bank Indonesia's monetary statistics, quasi money is part of M2. Because it is less liquid than currency, quasi money must be withdrawn or moved into a demand deposit before it can be used for transactions.
Understanding this term is the starting point before reading monetary reports or comparing it with crypto types as a liquid asset alternative.
Quasi Money vs M1 and M2
The money supply is divided into M1 and M2. M1 covers currency and demand deposits that are highly liquid. M2 is M1 plus quasi money. As long as funds remain in savings, time deposits, or foreign currency demand deposits, they are classified as quasi money.
• Currency: Physical banknotes and coins circulating in the economy.
• Demand deposits: Rupiah demand deposit balances ready for payment.
• Quasi money: Time deposits, savings deposits, and foreign currency demand deposits owned by the private sector.
Main Functions of Quasi Money in the Economy
Quasi money is not just a statistical figure. Central banks use it to measure liquidity pressure in the banking system. When quasi money grows quickly, it can signal rising credit demand or a shift in how people prefer to store their funds.
• Liquidity indicator: Quasi money growth shows how much public money is sitting inside banks.
• Bank funding source: Deposits and savings become the raw material for banks to extend credit.
• Monetary policy basis: Bank Indonesia monitors M2 and quasi money to set the direction of interest rates.
This framework is similar to reading fund flows in on-chain analysis. You need to observe trends, not just one number.
How Bank Indonesia Reads Quasi Money Data
Bank Indonesia publishes M2 and quasi money data every month through SEKI or the Indonesian Economic and Financial Statistics. This data is used for monetary policy evaluation and banking supervision. According to the 2024 Indonesian Economic Report, Bank Indonesia also links quasi money growth with bank credit expansion.
1. Track monthly growth: Bank Indonesia compares the current month with the previous month.
2. Look at annual growth: Year-on-year growth removes seasonal effects.
3. Compare with credit: When credit grows, quasi money usually rises too.
4. Watch interest rates: A higher BI Rate encourages people to place funds in deposits.
You can use this same framework to understand liquidity conditions through the Mobee tutorial.
Summary Table of Money Supply Components
The table below summarizes the differences between M1, quasi money, and M2.
Based on Bank Indonesia data across several SEKI editions, quasi money typically accounts for roughly 70-80% of M2 in Indonesia. This means most of Indonesia's money supply sits in deposit form rather than physical cash.
Examples of Quasi Money in Daily Life
Quasi money appears in the banking products you use every day. Here are some of the most common examples.
• Time deposits: Fixed-term deposits with tenors of 1, 3, 6, or 12 months.
• Savings accounts: Savings balances at commercial banks, including retail and foreign currency savings.
• Foreign currency demand deposits: Demand deposit accounts in US dollars or other foreign currencies owned by the private sector.
These instruments cannot be used directly for payments. You need to convert them into cash or demand deposits first. Products like Earn on crypto platforms follow a similar principle by locking assets to earn rewards.
Risks and Limitations of Quasi Money
Quasi money is not risk-free. Deposit holders face several issues that should be understood before assessing safety.
• Limited liquidity: Quasi money cannot be used directly and early withdrawal from time deposits may trigger penalties.
• Changing interest rates: A lower BI Rate can cut deposit rates and reduce the appeal of saving.
• Inflation: If inflation is higher than deposit rates, the real value of quasi money declines.
• Data misinterpretation: Faster quasi money growth does not always mean a healthy economy because speculation can also drive it.
The same logic applies when reading Spot Trade, where liquidity and transaction costs must be considered, not just potential returns.
How Beginners Can Read Quasi Money Data
Beginners do not need to memorize every monetary indicator to understand quasi money. You can start with a simple and systematic process.
1. Open the official release: Use Bank Indonesia's SEKI publication, which is updated monthly.
2. Record M1 and M2: The difference between M2 and M1 is the value of quasi money.
3. Compare annual growth: Check whether quasi money is growing faster than M1.
4. Connect it with interest rates: Higher rates usually strengthen deposit growth.
5. Add macro context: Read the data together with inflation, credit, and exchange rate figures.
Conclusion
Quasi money is an important component of M2 that reflects time deposits, savings, and foreign currency demand deposits. Understanding the difference between M1, M2, and quasi money helps you read the direction of monetary policy and banking liquidity. For investors, this data is essential context before evaluating risky assets such as crypto or other instruments.
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