Announcements

The slowdown in the twelve-month growth rate of M4N in August 1999 reflects to a large extent a “base effect”. i.e. the large increase (696 billion drachmas) in M4N in August 1998. It should be noted that towards the end of August 1998, the international money market crisis that had been triggered by developments in Russia had an impact on the domestic markets for government paper and foreign exchange, resulting in a shift of funds away from government bonds towards deposits (mostly in foreign currency). Furthermore, in August 1999 credit expansion to the private sector was contained.

Regarding individual M4N components, the twelve-month growth rate of currency in circulation accelerated (August 1999: 10.5 per cent, July 1999: 6.4%), as the decline in the outstanding stock of this component was markedly smaller in August 1999 than one year before (August 1999: -47 billion drachmas, August 1998: 123 billion drachmas). The twelve-month rate of increase in private deposits in drachmas and foreign exchange dropped to 9.8 per cent in August 1999 from 13.1 per cent in July 1999; this stemmed exclusively from foreign exchange deposits. Moreover, private holdings of repos increased by 133 billion drachmas, while private holdings of money market fund units declined further (-114 billion drachmas), as investors continued to shift towards equity-type mutual funds. Lastly, private holdings of government paper maturing in up to twelve months recorded a small increase (26 billion drachmas).