Monetary developments in the euro area: July 2022

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August 26, 2022

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 decreased from 5.7% in June to 5.5% in July 2022, averaging 5.7% in the three months to July. The components of M3 showed the following evolutions. The annual growth rate of the narrower aggregate M1, which includes currency in circulation and demand deposits, fell to 6.7% in July, from 7.2% in June. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) increased from 2.0% in June to 3.3% in July. The annual growth rate of negotiable instruments (M3-M2) fell to -1.4% in July after 2.0% in June.

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 4.8 percentage points (vs. 5.2 percentage points in June), short-term deposits other sight deposits (M2-M1) for 0.7 percentage point (vs. 0.5 percentage point) and negotiable instruments (M3-M2) contributed -0.1 percentage point (vs. 0.1 percentage point).

From the perspective of deposit-holding sectors in M3, the annual growth rate of deposits placed by households stood at 4.2% in July, compared with 4.1% in June, while the annual growth rate deposits placed by non-financial corporations rose to 6.1% in July from 5.8% in June. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) fell from 12.0% in June to 11.7% in July.

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 July 2022 breaks down as follows: loans to the private sector contributed 5, 0 percentage points (vs. 5.1 percentage points in June), credit to general government contributed 2.9 percentage points (vs. 3.5 percentage points), longer-term financial liabilities contributed 0.1 percentage point (vs. 0.0 percentage point), net foreign assets contributed -1.5 percentage point (vs. -1.4 percentage point), and other M3 counterparts contributed – 1.0 percentage point (vs -1.4 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

As regards credit dynamics, the annual growth rate of total credit to euro area residents declined to 5.8% in July 2022, from 6.2% the previous month. The annual growth rate of claims on general government fell to 7.0% in July, from 8.5% in June, while the annual growth rate of claims on the private sector stood at 5.2 % in July, unchanged from the previous month.

The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitization and notional cash pooling) stood at 6.3% in July, compared to 6 .2% in June. Among the borrowing sectors, the annual growth rate of adjusted loans to households stood at 4.5% in July, against 4.6% in June, while the annual growth rate of adjusted loans to non-financial corporations was fell from 6.9% to 7.7% in July. in June.

Chart 3

Adjusted loans to the private sector

(annual growth rates)

Adjusted data on loans to the private sector

Remarks:

  • New reporting requirements under Regulation (EU) 2021/379 of the European Central Bank of 22 January 2021 on balance sheet items of credit institutions and the monetary financial institutions sector (ECB/2021/2) entered into force from the January 2022 reference period. The implementation of the new regulation, as well as other changes to the statistical reporting framework and practices in euro area countries, may lead to preliminary data in subsequent press releases.
  • 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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