Monetary developments in the euro area: October 2021

Annual growth rate of broad monetary aggregate M3 increased to 7.7% in October 2021 from 7.5% in September (revised from 7.4%)
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, decreased to 10.7% in October from 11.1% in September
Annual growth rate of adjusted loans to households stood at 4.1% in October, unchanged from previous month
Annual growth rate of adjusted loans to non-financial corporations increased to 2.5% in October from 2.1% in September

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 increased to 7.7% in October 2021 from 7.5% in September, averaging 7.7% in the three months up to October. 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 10.7% in October from 11.1% in September. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) was -1.6% in October, compared with -2.5% in September. The annual growth rate of marketable instruments (M3-M2) increased to 11.1% in October from 6.8% in September.

Data for monetary aggregates

Looking at the components’ contributions to the annual growth rate of M3, the narrower aggregate M1 contributed 7.6 percentage points (down from 7.8 percentage points in September), short-term deposits other than overnight deposits (M2-M1) contributed -0.4 percentage point (up from -0.6 percentage point) and marketable instruments (M3-M2) contributed 0.6 percentage point (up from 0.3 percentage point).

From the perspective of the holding sectors of deposits in M3, the annual growth rate of deposits placed by households decreased to 6.5% in October from 7.0% in September, while the annual growth rate of deposits placed by non-financial corporations increased to 7.4% in October from 7.1% in September. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) increased to 18.2% in October from 14.9% in September.

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 October 2021 can be broken down as follows: credit to general government contributed 4.3 percentage points (down from 4.5 percentage points in September), credit to the private sector contributed 3.7 percentage points (up from 3.4 percentage points), longer-term financial liabilities contributed 0.2 percentage point (down from 0.3 percentage point), net external assets contributed -0.8 percentage point (up from -1.0 percentage point), and the remaining counterparts of M3 contributed 0.4 percentage point (up from 0.3 percentage point).

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 5.6% in October 2021, unchanged from the previous month. The annual growth rate of credit to general government decreased to 10.5% in October from 11.0% in September, while the annual growth rate of credit to the private sector increased to 3.7% in October from 3.4% in September.

The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitisation and notional cash pooling) increased to 3.4% in October from 3.2% in September. Among the borrowing sectors, the annual growth rate of adjusted loans to households stood at 4.1% in October, unchanged from the previous month, while the annual growth rate of adjusted loans to non-financial corporations increased to 2.5% in October from 2.1% in September.