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Monetary developments: MAY 2000

05/07/2000 - Press Releases

The twelve-month rate of increase in the liquidity indicator M4N, which is monitored by the Bank of Greece, decelerated in May 2000. More specifically, M4N (which comprises currency in circulation, private deposits in drachmas and foreign currency, as well as private holdings of repos, bank bonds, money market fund units and government paper with a maturity of up to one year) rose as follows:

12-month percentage changes

March

2000

April

2000

May

2000

March-May 2000

Average

M4N

5.4% (1)

9.4%(1)

8.2% (1)

7.7%(1)

The deceleration of the twelve-month growth rate of M4N in May 2000 was related both with the elimination of the effects associated with the Easter holiday (at a later date this year, compared with 1999), as well as with slower credit expansion to the public and the private sector in May 2000 (according to provisional data). However, owing to the relatively high twelve-month rates of increase in M4N in April and May 2000, the annual growth rate of M4N in the period March-May 2000 averaged 7.7 per cent, i.e. it exceeded slightly the reference range (5-7 per cent) for M4N growth between the beginning and the end of current year. It should be noted that the average annual rate of increase in M4N in the previous three-month period (February-April 2000) was 6.5 per cent.

Regarding the evolution of key M4N components, the twelve-month rate of increase in currency in circulation decelerated considerably (May 2000: 5.8 per cent, April 2000: 10.8 per cent), gradually returning to normal, as the effects of the Easter holiday are gradually wearing off. The twelve-month growth rate of private deposits recorded a smaller slowdown (May 2000: 10.4 per cent, April 2000: 11.4 per cent). By contrast, private holdings of repos increased further in May 2000 (+242 billion drachmas), as yields on repos remain higher than those on deposits and Treasury bills. Moreover, holdings of money market fund units increased slightly (+56 billion drachmas). Finally, private holdings of government paper with a maturity of up to one year decreased substantially in May 2000 (-233 billion drachmas). As noted in previous press releases, what matters more is the evolution of total M4N rather than changes in its individual components, as the latter reflect, to a large extent, intra-M4N shifts which do not affect total M4N.

Notes: (1) Provisional data.

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