Press Releases

Monetary Developments: DECEMBER 1999

28/01/2000 - Press Releases

In December 1999, the twelve-month rate of increase in the liquidity indicator M4N, which is monitored by the Bank of Greece, stood below the reference range for 1999 (7-9 per cent). 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 of a maturity of up to one year) rose as follows:

December

1999 over

December

1998:

5.6%(1)

November

1999 over

November

1998:

8.0%(1), (2)

December

1998 over

December

1997:

9.8%

The deceleration of the twelve-month rate of increase in M4N in December 1999 is related to the containment (as suggested by provisional data) of credit expansion to both the public and the private sector in that month.

Regarding the evolution of key M4N components, the twelve-month rate of increase in currency in circulation accelerated (December 1999: 21.1 per cent, November 1999: 10.7 per cent). The large growth of money in circulation in December 1999 reflects, apart from seasonal factors, increased holdings of banknotes in view of potential problems in the operation of information systems due to the year date change. Following the smooth transition to the year 2000, the money stock held by the public returned to normal levels relatively soon. By contrast, the twelve-month rate of increase in private deposits decelerated (December 1999: 13.0 per cent, November 1999: 17.8 per cent). Private holdings of repos decreased by 193 billion drachmas, while private holdings of money market fund units rose slightly by 53 billion drachmas. Finally, private holdings government paper of a maturity of up to one year dropped further, by 106 billion drachmas. As mentioned in previous press releases, changes in individual M4N components reflect, to a large degree, 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.

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