A Historical Analysis of Monetary Aggregates Definition Related to Financial Innovations

This paper intends that to investigate the process of change in the nature and the definition of money by using a historical analysis and phenomenology and then by analyzing comparative definition of money in some developed countries in order to complete the previous historical analysis. The main objective of this article is to clarify part of an available space on the definition and nature of money and especially monetary aggregates. The paper concludes that since two centuries ago, the nature of monetary aggregates has been consistently changing. With enhancing of high level technologies to the financial sector and then increasing of competition among several kinds of banks and non-banks financial intermediaries in issuing debt securities and creation of new financial assets, the appropriate experimental measure for money has been changed and will be continued to change in the future. Undoubtedly these changes will make the central banks duties as a responsible for implement monetary policy and surveillance of money and banking system more difficult and complicated.