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
2000 |
November
2000 |
December
2000 |
October-December 2000 average |
M4N |
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.