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.