What M3 was
M3 was M2 plus the money of large institutions: time deposits of $100,000 and up, institutional money market fund balances, repurchase agreements, and eurodollar deposits held by U.S. residents abroad. Where M2 approximates household money, M3 tried to capture the full stock of dollar liquidity, including the wholesale layer. At discontinuation it stood around $10.3 trillion, against roughly $6.7 trillion for M2.
The Fed's stated reasons
The announcement, published in November 2005 and effective March 23, 2006, gave two: M3 "does not appear to convey any additional information about economic activity that is not already embodied in M2," and the data was costly to collect relative to that value. By the 2000s this was defensible — the Fed had stopped targeting monetary aggregates in policy years earlier, and academic work found the extra components added little forecasting power for output or inflation. Several component series (large time deposits, for instance) continued to be published separately even after the headline aggregate ended.
The skeptical reading
Critics noted the timing: M3 was growing notably faster than M2 in 2005–06, driven by exactly the wholesale instruments — repos in particular — that would sit at the center of the 2008 crisis. Discontinuing the one series that aggregated wholesale dollar liquidity, two years before a wholesale funding crisis, struck many as either poor judgment or convenient. The fairer criticism is probably the first: no evidence has emerged of concealment, but the episode showed that "adds no information for forecasting CPI" is not the same as "adds no information," and post-crisis monitoring of shadow-bank liquidity effectively rebuilt parts of what M3 tracked, under other names.
What exists instead
The ECB, Bank of England, and most major central banks still publish M3 or an equivalent broad aggregate, so international comparison continues. For the U.S., private reconstructions of M3 exist with varying methodology and should be read with their assumptions in mind. Broader official measures also fill some of the gap: the Fed's financial accounts (Z.1) and the OFR's short-term funding monitors cover the institutional money landscape in more detail than M3 ever did, just not as a single headline number. For most purposes — and for everything on this site — M2 remains the workhorse U.S. money measure, tracked live on the dashboard.
Related reading
M0, M1, M2, M3: The Money Aggregates Explained · What Is the M2 Money Supply? · The Fed's Balance Sheet, Explained