"Money supply" is the total stock of money in the economy. It comes in nested measures, from narrow to broad.
M1 — the most liquid money: cash in circulation plus overnight deposits (current accounts).
M2 — M1 plus deposits with a short maturity or notice period.
M3 — the broad measure the ECB watches: M2 plus repos, money-market fund shares and short-term debt securities.
Why it matters
Over the long run, when the money supply grows much faster than the real economy, prices tend to rise — money loses value. M3 growth is therefore a key signal behind inflation and currency debasement. Dividing money supply by population gives money per person, a useful way to see the trend free of compounding totals.
Source: ECB monetary aggregates (eurozone), monthly.