Monetary developments in the euro area: May 2020

• Annual growth rate of broad monetary aggregate M3 increased to 8.9% in May 2020 from 8.2% in April (revised from 8.3%)
• Annual growth rate of narrower monetary aggregate M1comprising currency in circulation and overnight deposits, increased to 12.5% in May from 11.9% in April
• Annual growth rate of adjusted loans to households stood at 3.0% in May, unchanged from previous month
• Annual growth rate of adjusted loans to non-financial corporations increased to 7.3% in May from 6.6% in April

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 increased to 8.9% in May 2020 from 8.2% in April, averaging 8.2% in the three months up to 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, increased to 12.5% in May from 11.9% in April. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) increased to 0.7% in May from -0.3% in April. The annual growth rate of marketable instruments (M3-M2) stood at 5.8% in May, compared with 5.9% in April.

Chart 1

Monetary aggregates

(annual growth rates)

Looking at the components' contributions to the annual growth rate of M3, the narrower aggregate M1 contributed 8.4 percentage points (up from 8.0 percentage points in April), short-term deposits other than overnight deposits (M2-M1) contributed 0.2 percentage point (up from -0.1 percentage point) and marketable instruments (M3-M2) contributed 0.3 percentage point (as in the previous month).From the perspective of the holding sectors of deposits in M3, the annual growth rate of deposits placed by households increased to 7.0% in May from 6.7% in April, while the annual growth rate of deposits placed by non-financial corporations increased to 17.6% in May from 13.7% in April. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) decreased to 9.6% in May from 12.2% 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 2020 can be broken down as follows: credit to the private sector contributed 5.3 percentage points (up from 4.8 percentage points in April), credit to general government contributed 3.6 percentage points (up from 2.3 percentage points), net external assets contributed 1.0 percentage point (down from 1.4 percentage points), longer-term financial liabilities contributed 0.0 percentage point (as in the previous month), and the remaining counterparts of M3 contributed -0.9 percentage point (down from -0.3 percentage point).

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 increased to 6.2% in May 2020 from 4.9% in the previous month. The annual growth rate of credit to general government increased to 9.8% in May from 6.2% in April, while the annual growth rate of credit to the private sector increased to 4.9% in May from 4.4% in April.The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitisation and notional cash pooling) increased to 5.3% in May from 4.9% in April. Among the borrowing sectors, the annual growth rate of adjusted loans to households stood at 3.0% in May, unchanged from the previous month, while the annual growth rate of adjusted loans to non-financial corporations increased to 7.3% in May from 6.6% in April.

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.