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Monetary developments: AUGUST 2000

06/10/2000 - Press Releases

The twelve-month rate of increase in the liquidity indicator M4N, which is monitored by the Bank of Greece, decelerated slightly in August 2000. 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 issued with a maturity of up to one year) rose as follows:

12-month percentage changes







June-August 2000 average


9.3%(1) ,(2)

9.7 (1),(2)


9.5% (1)

However, the average twelve-month rate of increase in M4N over the June-August 2000 period rose to 9.5 per cent, from 9 per cent in the May-July 2000 period. This fast growth of M4N in the period under review is associated with the relatively high credit expansion and the low level of M4N in the corresponding months of 1999 due to the contractionary effect of considerable bank capital increases by public subscription. It should be noted that the reference range for M4N growth between the beginning and the end of the current year is 5-7 per cent.

Regarding the evolution of key M4N components, the twelve-month rate of increase in currency in circulation decelerated (August 2000: 6.9 per cent, July 2000: 7.2 per cent). Private deposits (in drachmas and foreign currency) dropped considerably in August 2000 (-557 billion drachmas), resulting in a further decline in their twelve-month growth rate (August 2000: 5.6 per cent, July 2000: 9.1 per cent). By contrast, private holdings of repos increased substantially (1,017 billion drachmas), as their yields, which are not subject to taxation, remain higher than those on deposits and Treasury bills. It is also noted that, as from June 2000, banks’ liabilities from repos are not included in the base for the calculation of their reserves under the reserve requirement system of the Bank of Greece. Private holdings of money market fund units decreased in August 2000 (-211 billion drachmas), while private holdings of government paper issued with a maturity of up to one year showed a slight increase (29 billion drachmas) in that month. As mentioned in previous press releases, what matters more is the evolution of total M4N rather than changes in its individual components, as such changes largely reflect intra-M4N shifts which do not affect total M4N.


Notes: (1) Provisional data.

            (2) Revised data.


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