Monetary developments in the euro area: March 2020

• Annual growth rate of broad monetary aggregate M3 increased to 7.5% in March 2020 from 5.5% in February
• Annual growth rate of narrower monetary aggregate M1comprising currency in circulation and overnight deposits, increased to 10.3% in March from 8.1% in February
• Annual growth rate of adjusted loans to households decreased to 3.4% in March from 3.7% in February
• Annual growth rate of adjusted loans to non-financial corporations increased to 5.4% in March from 3.0% in February

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 increased to 7.5% in March 2020 from 5.5% in February, averaging 6.0% in the three months up to March. The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, increased to 10.3% in March from 8.1% in February. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) increased to 0.0% in March from -0.4% in February. The annual growth rate of marketable instruments (M3-M2) increased to 9.6% in March from 2.5% in February.

Chart 1

Monetary aggregates

(annual growth rates)

Looking at the components' contributions to the annual growth rate of M3, the narrower aggregate M1 contributed 7.0 percentage points (up from 5.5 percentage points in February), short-term deposits other than overnight deposits (M2-M1) contributed 0.0 percentage point (up from -0.1 percentage point) and marketable instruments (M3-M2) contributed 0.5 percentage point (up from 0.1 percentage point).From the perspective of the holding sectors of deposits in M3, the annual growth rate of deposits placed by households increased to 6.0% in March from 5.4% in February, while the annual growth rate of deposits placed by non-financial corporations increased to 9.6% in March from 6.5% in February. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) increased to 16.9% in March from 7.1% in February.

Counterparts of the broad monetary aggregate M3

As a reflection of changes in the items on the monetary financial institution (MFI) consolidated balance sheet other than M3 (counterparts of M3), the annual growth rate of M3 in March 2020 can be broken down as follows: credit to the private sector contributed 4.5 percentage points (up from 3.7 percentage points in February), net external assets contributed 2.1 percentage points (down from 2.7 percentage points), credit to general government contributed 0.6 percentage point (up from -0.7 percentage point), longer-term financial liabilities contributed -0.2 percentage point (up from -0.5 percentage point), and the remaining counterparts of M3 contributed 0.4 percentage point (up from 0.3 percentage point).

Chart 2

Contribution of the M3 counterparts to the annual growth rate of M3

(percentage points)

Credit to euro area residents

As regards the dynamics of credit, the annual growth rate of total credit to euro area residents increased to 3.5% in March 2020 from 2.0% in the previous month. The annual growth rate of credit to general government increased to 1.6% in March from -2.0% in February, while the annual growth rate of credit to the private sector increased to 4.2% in March from 3.4% in February.The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitisation and notional cash pooling) increased to 5.0% in March from 3.7% in February. Among the borrowing sectors, the annual growth rate of adjusted loans to households decreased to 3.4% in March from 3.7% in February, while the annual growth rate of adjusted loans to non-financial corporations increased to 5.4% in March from 3.0% in February.

Chart 3

Adjusted loans to the private sector

(annual growth rates)

Notes:

• Data in this press release are adjusted for seasonal and end-of-month calendar effects, unless stated otherwise.
• "Private sector" refers to euro area non-MFIs excluding general government.
• Hyperlinks in the main body of the press release and in annex tables lead to data that may change with subsequent releases as a result of revisions. Figures shown in annex tables are a snapshot of the data as at the time of the current release.