Monetary developments in the euro area: December 2020

29 January 2021

• Annual growth rate of broad monetary aggregate M3 increased to 12.3% in December 2020 from 11.0% in November
• Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, increased to 15.6% in December from 14.5% in November
• Annual growth rate of adjusted loans to households stood at 3.1% in December, unchanged from previous month
• Annual growth rate of adjusted loans to non-financial corporations stood at 7.0% in December, compared with 6.9% in November

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 increased to 12.3% in December 2020 from 11.0% in November, averaging 11.3% in the three months up to December. 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 15.6% in December from 14.5% in November. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) increased to 1.8% in December from 1.2% in November. The annual growth rate of marketable instruments (M3-M2) increased to 24.1% in December from 14.4% in November.

Data for monetary aggregates

Looking at the components' contributions to the annual growth rate of M3, the narrower aggregate M1 contributed 10.7 percentage points (up from 10.0 percentage points in November), short-term deposits other than overnight deposits (M2-M1) contributed 0.5 percentage point (up from 0.3 percentage point) and marketable instruments (M3-M2) contributed 1.2 percentage points (up from 0.7 percentage point).

From the perspective of the holding sectors of deposits in M3, the annual growth rate of deposits placed by households increased to 8.7% in December from 8.3% in November, while the annual growth rate of deposits placed by non-financial corporations increased to 20.7% in December from 20.3% in November. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) increased to 14.5% in December from 11.0% in November.

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 December 2020 can be broken down as follows: credit to general government contributed 8.1 percentage points (up from 7.6 percentage points in November), credit to the private sector contributed 5.6 percentage points (up from 5.3 percentage points), longer-term financial liabilities contributed 0.3 percentage point (down from 0.4 percentage point), net external assets contributed -0.2 percentage point (as in the previous month), and the remaining counterparts of M3 contributed -1.5 percentage points (up from -2.2 percentage points).

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

Credit to euro area residents

As regards the dynamics of credit, the annual growth rate of total credit to euro area residents increased to 9.6% in December 2020 from 9.1% in the previous month. The annual growth rate of credit to general government increased to 22.2% in December from 21.2% in November, while the annual growth rate of credit to the private sector increased to 5.3% in December from 5.0% in November.

The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitisation and notional cash pooling) stood at 4.7% in December, unchanged from the previous month. Among the borrowing sectors, the annual growth rate of adjusted loans to households stood at 3.1% in December, unchanged from the previous month, while the annual growth rate of adjusted loans to non-financial corporations stood at 7.0% in December, compared with 6.9% in November.

Data for adjusted loans to the private sector

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.