Monetary developments in the euro area: September 2022

• PRESS RELEASE

Monetary developments in the euro area: September 2022

26 October 2022

• Annual growth rate of broad monetary aggregate M3 increased to 6.3% in September 2022 from 6.1% in August
• Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, decreased to 5.6% in September from 6.8% in August
• Annual growth rate of adjusted loans to households stood at 4.4% in September, compared with 4.5% in August
• Annual growth rate of adjusted loans to non-financial corporations stood at 8.9% in September, compared with 8.8% in August

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 increased to 6.3% in September 2022 from 6.1% in August, averaging 6.0% in the three months up to September. However, this increase was driven by a one-off technical factor, without which the annual growth rate of M3 would have declined to around 5.8% in September 2022.^[1] The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, decreased to 5.6% in September from 6.8% in August. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) increased to 8.1% in September from 4.6% in August. The annual growth rate of marketable instruments (M3-M2) increased to 8.2% in September from 2.8% in August.

Chart 1

Monetary aggregates

(annual growth rates)

Looking at the components' contributions to the annual growth rate of M3, the narrower aggregate M1 contributed 4.1 percentage points (down from 5.0 percentage points in August), short-term deposits other than overnight deposits (M2-M1) contributed 1.8 percentage points (up from 1.0 percentage points) and marketable instruments (M3-M2) contributed 0.4 percentage points (up from 0.1 percentage points).

From the perspective of the holding sectors of deposits in M3, the annual growth rate of deposits placed by households stood at 4.2% in September, unchanged from the previous month, while the annual growth rate of deposits placed by non-financial corporations decreased to 6.0% in September from 7.4% in August. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) increased to 18.3% in September from 14.6% in August.

Counterparts of the broad monetary aggregate M3

As a reflection of changes in the items on the monetary financial institution (MFI) consolidated balance sheet other than M3 (counterparts of M3), the annual growth rate of M3 in September 2022 can be broken down as follows: credit to the private sector contributed 5.4 percentage points (as in the previous month), credit to general government contributed 2.1 percentage points (down from 2.3 percentage points), longer-term financial liabilities contributed 0.0 percentage points (down from 0.1 percentage points), net external assets contributed -1.1 percentage points (as in the previous month), and the remaining counterparts of M3 contributed -0.2 percentage points (up from -0.4 percentage points).

Chart 2

Contribution of the M3 counterparts to the annual growth rate of M3

(percentage points)

Credit to euro area residents

As regards the dynamics of credit, the annual growth rate of total credit to euro area residents stood at 5.5% in September 2022, compared with 5.6% in the previous month. The annual growth rate of credit to general government decreased to 5.0% in September from 5.5% in August, while the annual growth rate of credit to the private sector stood at 5.7% in September, compared with 5.6% in August.

The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitisation and notional cash pooling) stood at 6.9% in September, compared with 6.8% in August. Among the borrowing sectors, the annual growth rate of adjusted loans to households stood at 4.4% in September, compared with 4.5% in August, while the annual growth rate of adjusted loans to non-financial corporations stood at 8.9% in September, compared with 8.8% in August.

Chart 3

Adjusted loans to the private sector

(annual growth rates)

Notes:

• Data in this press release are adjusted for seasonal and end-of-month calendar effects, unless stated otherwise.
• "Private sector" refers to euro area non-MFIs excluding general government.
• Hyperlinks in the main body of the press release and in annex tables lead to data that may change with subsequent releases as a result of revisions. Figures shown in annex tables are a snapshot of the data as at the time of the current release.

1. The September 2022 M3 figures include a large temporary position of the Eurosystem vis-a-vis a clearinghouse, classified within the “non-monetary financial corporations excluding insurance corporations and pension funds” sector. All the aggregates to which these deposits belong are inflated by this one-off technical factor.

European Central Bank

26 October 2022

Table: Annex to the press release on monetary developments in the euro area

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