Monetary developments in the euro area: December 2021

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January 28, 2022

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 decreased from 7.4% in November to 6.9% in December 2021, averaging 7.3% in the three months to December. The components of M3 showed the following evolutions. The annual growth rate of the narrower aggregate M1, which includes currency in circulation and overnight deposits, declined to 9.8% in December from 10.0% in November. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) stood at -1.5% in December, compared to -1.4% in November. The annual growth rate of negotiable instruments (M3-M2) declined from 12.2% in November to 6.4% in December.

Chart 1

Monetary aggregates

(annual growth rates)

Data for monetary aggregates

Looking at the component contributions to the annual growth rate of M3, the narrower aggregate M1 contributed 7.0 percentage points (compared to 7.1 percentage points in November), short-term deposits other sight deposits (M2-M1) contributed -0.4 percentage point (vs -0.3 percentage point) and negotiable instruments (M3-M2) contributed 0.3 percentage point (vs. 0.6 percentage points).

From the perspective of deposit-holding sectors in M3, the annual growth rate of deposits placed by households decreased from 6.0% in November to 5.5% in December, while the annual growth rate of deposits placed by non-financial corporations rose to 8.5% in December from 7.9% in November. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) fell from 15.5% in November to 13.3% in December.

Counterparts of the broad monetary aggregate M3

Reflecting the evolution of the consolidated balance sheet items of monetary financial institutions (MFIs) other than M3 (counterparts of M3), the annual growth rate of M3 in December 2021 breaks down as follows: claims on general government contributed 4.6 percentage points (vs. 4.4 percentage points in November), credit to the private sector contributed 3.9 percentage points (vs. 3.7 percentage points), longer-term financial liabilities contributed 0 .3 percentage point (vs. 0.2 percentage point), net foreign assets contributed -0.8 percentage point (as in the previous month), and other M3 counterparts contributed -1.0 percentage point percentage (versus -0.2 percentage point).

Chart 2

Contribution of M3 counterparts to the annual growth rate of M3

(percentage points)


Data on the contribution of M3 counterparts to the annual growth rate of M3

Credit to euro area residents

Regarding credit dynamics, the annual growth rate of total credit to euro area residents increased from 5.8% in the previous month to 6.1% in December 2021. The annual growth rate of claims general government rose from 10.8% in November to 11.3% in December, while the annual growth rate of claims on the private sector rose to 3.9% in December from 3.7% in November .

The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitization and notional cash pooling) increased to 4.1% from 3.7% in November in December. Among borrowing sectors, the annual growth rate of adjusted loans to households stood at 4.1% in December, compared to 4.2% in November, while the annual growth rate of adjusted loans to non-financial corporations was fell from 2.9% to 4.2% in December. in November.

Chart 3

Adjusted loans to the private sector

(annual growth rates)


Adjusted data on loans to the private sector

Remarks:

  • The data in this press release are corrected for seasonal and calendar effects at the end of the month, unless otherwise stated.
  • The “private sector” refers to euro area non-MFIs excluding general government.
  • Hyperlinks in the main body of the press release and in accompanying tables lead to data that may change with subsequent releases due to revisions. The figures presented in the tables in the appendix are a snapshot of the data at the time of current publication.
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