Announcements

The deceleration of the twelve-month rate of increase in M4N in October 1999 is related to the increased net government borrowing, as well as to capital outflows. Additionally, banks continued to raise funds from the Stock Exchange. It should be noted that in the January-October 1999 period banks increased their share capital by 1,069 billion drachmas, compared with 204 billion drachmas in the corresponding 1998 period.

Regarding the evolution of key M4N components, both the twelve-month rate of increase in currency in circulation and private deposits decelerated (October 1999: 8.4 per cent, September 1999: 11.2 per cent and October 1999: 12.9 per cent, September 1999: 16.4 per cent, respectively). By contrast, private holdings of repos grew substantially (570 billion drachmas), while private holdings of bank bonds remained almost unchanged (7 billion drachmas increase). Private holdings of money market fund units demonstrated a further reduction (-154 billion drachmas), as investors continued to shift to equity type mutual funds also in October. Finally, holdings of government paper with a maturity of up to one year rose by 77 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.