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Monetary developments: NOVEMBER 1999

04/01/2000 - Press Releases

In November 1999, the twelve-month rate of increase in M4N, which is monitored by the Bank of Greece, accelerated but remained within the reference range for 1999 (7-9 per cent). 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 an initial maturity of up to one year) rose as follows:

November

1999 over

November

1998:

8.4%(1)

October

1999 over

October

1998:

5.3%(1)

December

1998 over

December

1997:

9.8%

The acceleration of the twelve-month rate of increase in M4N in November 1999 is mainly due to higher public expenditure which partly reflect a speeding up of payments in order to facilitate the transition to the year 2000. This expenditure was largely financed by drawing on Government deposits held with the Bank of Greece, which decreased by about 500 billion drachmas in November 1999. The acceleration of the twelve-month growth rate of M4N is also related to faster credit expansion to the private sector in November.

Regarding the evolution of key M4N components, an acceleration was recorded in both the twelve-month rate of increase in currency in circulation (November 1999: 10.7 per cent, October 1999: 8.4 per cent) and private deposits (November 1999: 18.1 per cent, October 1999: 12.9 per cent). Private holdings of repos grew substantially (586 billion drachmas). By contrast, private holdings of bank bonds decreased slightly (-18 billion drachmas), while private holdings of money market fund units declined further (-329 billion drachmas). Finally, holdings of government paper with a maturity of up to one year decreased (-195 billion drachmas) in November 1999, as Treasury bill issues were considerably lower than redemptions. As mentioned in previous press releases, fluctuations in M4N components largely reflect intra-M4N shifts that do not affect total M4N, which is therefore a more accurate measure of monetary conditions and of the monetary policy stance.

Notes: (1) Provisional data.

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