Monetary developments in the euro area: February 2024

28 March 2024

• Annual growth rate of broad monetary aggregate M3 increased to 0.4% in February 2024 from 0.1% in January
• Annual growth rate of narrower monetary aggregate M1, comprising currency in circulation and overnight deposits, was -7.7% in February, compared with -8.6% in January
• Annual growth rate of adjusted loans to households stood at 0.3% in February, unchanged from previous month
• Annual growth rate of adjusted loans to non-financial corporations increased to 0.4% in February from 0.2% in January

Components of the broad monetary aggregate M3

The annual growth rate of the broad monetary aggregate M3 increased to 0.4% in February 2024 from 0.1% in January, averaging 0.2% in the three months up to February. 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, was -7.7% in February, compared with -8.6% in January. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) decreased to 18.8% in February from 19.8% in January. The annual growth rate of marketable instruments (M3-M2) decreased to 17.6% in February from 22.4% in January.

Chart 1

Monetary aggregates

(annual growth rates)

Looking at the components' contributions to the annual growth rate of M3, the narrower aggregate M1 contributed -5.4 percentage points (up from -6.1 percentage points in January), short-term deposits other than overnight deposits (M2-M1) contributed 4.8 percentage points (down from 5.0 percentage points) and marketable instruments (M3-M2) contributed 0.9 percentage points (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 0.6% in February from 0.3% in January, while the annual growth rate of deposits placed by non-financial corporations stood at -1.1% in February, unchanged from the previous month. Finally, the annual growth rate of deposits placed by non-monetary financial corporations (excluding insurance corporations and pension funds) was -1.7% in February, compared with -5.3% in January.

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 February 2024 can be broken down as follows: net external assets contributed 3.3 percentage points (down from 3.6 percentage points in January), credit to the private sector contributed 0.6 percentage points (up from 0.4 percentage points), credit to general government contributed -1.1 percentage points (down from ‑1.0 percentage points), longer-term financial liabilities contributed -2.2 percentage points (up from ‑2.3 percentage points), and the remaining counterparts of M3 contributed -0.3 percentage points (up from -0.6 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 -0.3% in February 2024, compared with -0.4% in the previous month. The annual growth rate of credit to general government was -2.8% in February, compared with -2.4% in January, while the annual growth rate of credit to the private sector increased to 0.7% in February from 0.4% in January.

The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitisation and notional cash pooling) increased to 0.7% in February from 0.4% in January. Among the borrowing sectors, the annual growth rate of adjusted loans to households stood at 0.3% in February, unchanged from the previous month, while the annual growth rate of adjusted loans to non-financial corporations increased to 0.4% in February from 0.2% in January.

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.