Monetary developments in the euro area: January 2021

Annual growth rate of broad monetary aggregate M3 stood at 12.5% in January 2021, after 12.4% in December 2020 (revised from 12.3%)
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, increased to 16.4% in January from 15.6% in December
Annual growth rate of adjusted loans to households stood at 3.0% in January, compared with 3.1% in December
Annual growth rate of adjusted loans to non-financial corporations stood at 7.0% in January, compared with 7.1% in December

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 stood at 12.5% in January 2021, after 12.4% in December 2020, averaging 12.0% in the three months up to January. 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, increased to 16.4% in January from 15.6% in December. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) decreased to 1.1% in January from 1.7% in December. The annual growth rate of marketable instruments (M3-M2) decreased to 18.2% in January from 25.0% in December.

Data for monetary aggregates

Looking at the components’ contributions to the annual growth rate of M3, the narrower aggregate M1 contributed 11.3 percentage points (up from 10.7 percentage points in December), short-term deposits other than overnight deposits (M2-M1) contributed 0.3 percentage point (down from 0.4 percentage point) and marketable instruments (M3-M2) contributed 0.9 percentage point (down from 1.2 percentage points).

From the perspective of the holding sectors of deposits in M3, the annual growth rate of deposits placed by households increased to 9.1% in January from 8.7% in December, while the annual growth rate of deposits placed by non-financial corporations increased to 21.8% in January from 20.7% in December. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) increased to 15.6% in January from 14.5% in December.

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 January 2021 can be broken down as follows: credit to general government contributed 8.3 percentage points (up from 8.1 percentage points in December), credit to the private sector contributed 5.4 percentage points (down from 5.7 percentage points), longer-term financial liabilities contributed 0.5 percentage point (up from 0.3 percentage point), net external assets contributed -0.4 percentage point (down from -0.2 percentage point), and the remaining counterparts of M3 contributed -1.3 percentage points (up from -1.4 percentage points).

Data for contribution of the M3 counterparts to the annual growth rate of M3

Credit to euro area residents

As regards the dynamics of credit, the annual growth rate of total credit to euro area residents stood at 9.6% in January 2021, unchanged from the previous month. The annual growth rate of credit to general government increased to 22.9% in January from 22.2% in December, while the annual growth rate of credit to the private sector decreased to 5.1% in January from 5.4% in December.

The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitisation and notional cash pooling) decreased to 4.5% in January from 4.7% in December. Among the borrowing sectors, the annual growth rate of adjusted loans to households stood at 3.0% in January, compared with 3.1% in December, while the annual growth rate of adjusted loans to non-financial corporations stood at 7.0% in January, compared with 7.1% in December.