Monetary developments: SEPTEMBER 1999
29/10/1999 - Announcements
In September 1999, the liquidity indicator M4N, which gives an overview of liquidity in the economy and is monitored by the Bank of Greece, decreased by 237 billion drachmas compared with August. However, the M4N twelve-month rate of increase rose to 6.9 per cent in September, but stood lower than in July (7.9 per cent) and its reference range (7-9 per cent) for the current year. More specifically, M4N (which comprises currency in circulation, private deposits in drachmas and foreign exchange as well as private holdings of repos, bank bonds, money market fund units and government paper of a maturity of up to one year) rose as follows:
|
September |
1999 over |
September |
1998: |
6.9%(1) |
|
August |
1999 over |
August |
1998: |
5.6%(1) |
|
December |
1998 over |
|
1997: |
9.8% |
It should be recalled that the considerable deceleration of the twelve-month rate of increase in M4N in August 1999 was partly due, as mentioned in the previous press release on monetary developments, to shifts of funds to instruments included in M4N in August 1998. In September 1998, with the normalisation of market conditions, the level of M4N, which serves as a base for calculating the twelve-month rate of change in the September 1998-September 1999 period, was restored. Besides, the containment of credit expansion after July 1999 – especially in the case of loans to domestic and import trade and private consumers – also contributed to the slowdown of M4N growth.
Regarding the evolution of key M4N components, the twelve-month rate of increase in currency in circulation accelerated slightly (September 1999: 11.2 per cent, August 1999: 10.5 per cent), while private deposits grew considerably (September 1999: 16.4 per cent, August 1999: 9.8 per cent). Moreover, in September 1999 private holdings of repos and bank bonds declined (by -58 billion drachmas and -14 billion drachmas, respectively). Private holdings in money market fund units demonstrated a further reduction (-494 billion drachmas), as the shift of investors to equity type mutual funds continued also in September. Finally, holdings of government paper with a maturity of up to one year fell substantially (-386 billion drachmas) in September 1999, as new Treasury bill issues were considerably lower than redemptions. It should be noted that changes in individual M4N components are of limited significance, given that they reflect intra-M4N shifts that do not affect total M4N, which is a more accurate measure of monetary conditions and of the monetary policy stance.
Notes: (1) Provisional data.