Monetary developments in the euro area: May 2021

Annual growth rate of broad monetary aggregate M3 decreased to 8.4% in May 2021 from 9.2% in April
Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, decreased to 11.6% in May from 12.3% in April
Annual growth rate of adjusted loans to households stood at 3.9% in May, compared with 3.8% in April
Annual growth rate of adjusted loans to non-financial corporations decreased to 1.9% in May from 3.2% in April

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 decreased to 8.4% in May 2021 from 9.2% in April, averaging 9.2% in the three months up to and including May. 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 11.6% in May from 12.3% in April. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) decreased to -0.7% in May from 0.3% in April. The annual growth rate of marketable instruments (M3-M2) increased to 11.3% in May from 10.5% in April.

Data for monetary aggregates

Looking at the components’ contributions to the annual growth rate of M3, the narrower aggregate M1 contributed 8.1 percentage points (down from 8.6 percentage points in April), short-term deposits other than overnight deposits (M2-M1) contributed -0.2 percentage point (down from 0.1 percentage point) and marketable instruments (M3-M2) contributed 0.6 percentage point (up from 0.5 percentage point).

From the perspective of the holding sectors of deposits in M3, the annual growth rate of deposits placed by households decreased to 7.9% in May from 8.3% in April, while the annual growth rate of deposits placed by non-financial corporations decreased to 8.9% in May from 12.8% in April. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) increased to 11.4% in May from 8.7% in April.

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 May 2021 can be broken down as follows: credit to general government contributed 5.9 percentage points (down from 6.7 percentage points in April), credit to the private sector contributed 3.6 percentage points (down from 4.1 percentage points), longer-term financial liabilities contributed 0.4 percentage point (up from 0.1 percentage point), net external assets contributed -0.2 percentage point (down from -0.1 percentage point), and the remaining counterparts of M3 contributed -1.3 percentage points (up from -1.6 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 decreased to 6.7% in May 2021 from 7.7% in the previous month. The annual growth rate of credit to general government decreased to 15.4% in May from 18.0% in April, while the annual growth rate of credit to the private sector decreased to 3.5% in May from 4.0% in April.

The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitisation and notional cash pooling) decreased to 2.7% in May from 3.2% in April. Among the borrowing sectors, the annual growth rate of adjusted loans to households stood at 3.9% in May, compared with 3.8% in April, while the annual growth rate of adjusted loans to non-financial corporations decreased to 1.9% in May from 3.2% in April.