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Monetary developments: DECEMBER 2000

09/02/2001 - Press Releases

The twelve-month rate of increase in the liquidity indicator M4N, which is monitored by the Bank of Greece, decelerated further in December 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) has recorded the following rates of growth:

12-month percentage changes







October-December 2000 average


13.5% (1)

12.6% (1)

10.4% (1)

12.2% (1)

The average twelve-month rate of increase in M4N over the fourth quarter of 2000 fell to 12.2 per cent, from 12.7 per cent in the September-November 2000 period. The deceleration of M4N growth in December 2000 relative to the previous month partly reflects a decline in the outstanding amount (in drachma terms) of deposits denominated in foreign currency (mainly as a result of the depreciation of the US dollar in December 2000), as well as a base effect due to the substantial growth of M4N in December 1999 over November 1999. It should be recalled that the reference range for M4N growth between the beginning and the end of 2000 had been 5-7 per cent.

Regarding the evolution of key M4N components, currency in circulation recorded a much lower increase in December 2000 compared with December 1999 ( 416 billion drachmas against an increase of 606 billion drachmas). It should be noted that increased holdings of banknotes in December 1999 was associated with concerns about the implications of the year date change for IT systems. For this reason, the twelve-month growth rate of currency in circulation was negative in December 2000 (-1.1 per cent, November 2000: 7.7 per cent). Private deposits (in drachmas and foreign currency) rose by 1,002 billion drachmas, although their twelve-month rate of growth declined (December 2000: 6.8 per cent, November 2000: 7.4 per cent). Private holdings of repos dropped by 726 billion drachmas in December 2000, while private holdings of money market fund units increased (+118 billion drachmas) and private holdings of government paper issued with a maturity of up to one year declined (-87 billion drachmas) in December 2000. What is more important for the evaluation of developments in the liquidity of the economy is the evolution of total M4N rather than the rates of change in individual M4N components, as such rates are often largely affected by shifts of funds between these components.


Notes: (1) Provisional data.




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