Consolidated balance sheet of the Monetary Financial Institutions sector (September 1997-October 1998) and the broad monetary aggregate M3 (December 1996-October 1998)
The Tables attached to this press release contain the first statistics produced by the European System of Central Banks relating to the consolidated balance sheet of the Monetary Financial Institutions sector (MFI sector) for the euro area and to the broad monetary aggregate M3 derived from this consolidated balance sheet. The data published today reflect the position as of 1 December 1998. Henceforth, these statistics will be updated (including for possible revisions to historical data) and published on a monthly basis. This press release covers the period September 1997-October 1998 for the month-end assets and liabilities on the consolidated balance sheet of the MFI sector and the month-end stock of M3 and its components. Furthermore, partly on the basis of estimates, 12-month growth rates of M3 are presented for the period December 1996-October 1998. Although the annual growth rates of M3 must be interpreted with some caution, as these data have a provisional nature, they represent the most reliable and comprehensive current source of monetary information for the euro area.
Consolidated balance sheet of the MFI sector
The consolidated balance sheet of the MFI sector (see Table 1, Annex) provides a complete and homogeneous coverage of those financial intermediaries that are considered to be money creating within the euro area. The principal aim is to provide the European Central Bank (ECB) with a comprehensive statistical picture of monetary and financial developments in the euro area and with the basis for the definition and presentation of the monetary aggregates and their counterparts.
The consolidated balance sheet of the MFI sector is based therefore on the following two main elements:
- a List of MFIs for statistical purposes. The ECB establishes, updates and publishes on the Internet on a regular basis the List of MFIs for statistical purposes in accordance with harmonised classification principles. Procedures for monitoring and continuous checking ensure that the List of MFIs remains up -to date, accurate, as homogeneous as possible and sufficiently stable for statistical purposes; and
- a specification of the statistical information reported by these MFIs at monthly and quarterly frequency. The ECB requires statistical information in terms of harmonised instrument/maturity categories, currencies and counterparties. The ECB will compile these aggregates for the euro area as amounts outstanding (stocks) and as flows derived from them.
One important aspect is financial innovation, which is itself affected by the development of the Single Market and the move to Monetary Union, both of which affect the characteristics of financial instruments and induce financial institutions to change the focus of their business.
The statistical data required to compile the consolidated balance sheet of the MFI sector were first defined in the so-called Implementation Package ("Statistical requirements for Stage Three of Monetary Union"), which was made available to reporting agents by the European Monetary Institute and the national central banks in July 1996. Starting from 1 January 1999, the required statistical information will be collected and compiled on the basis of Regulation ECB/1998/16 concerning the consolidated balance sheet of the Monetary Financial Institutions sector (see related press release published on 1 December 1998).
Composition of M3
As mentioned in the press release entitled "The quantitative reference value for monetary growth" published on 1 December 1998, the broad monetary aggregate M3 consists of currency in circulation (net) plus certain liabilities of MFIs resident in the euro area and, in the case of deposits, the liabilities of some institutions that are part of central government (such as Post Offices and Treasuries). These liabilities included in M3 are: overnight deposits; deposits with an agreed maturity of up to two years; deposits redeemable at notice up to three months; repurchase agreements; debt securities issued with a maturity of up to two years (net); units/shares of money market funds and money market paper (net). Only such positions vis-à-vis euro area residents other than MFIs and central government are included in M3 (see Table 2, Annex).
With respect to the components of M3, overnight deposits account for the largest share, namely 31% of M3 in October 1998. The share of deposits with an agreed maturity of up to two years in that month was 20% and that of deposits redeemable at notice up to three months 27% of M3. The weight of both currency in circulation (net) and of unit/shares of money market funds and money market paper (net) was approximately 7%. Among the smaller components, the outstanding stock of repurchase agreements accounted for 5% of M3 in October 1998 and debt securities issued with a maturity of up to two years (net) for 2%.
Developments in M3
The monetary aggregate M3 for the euro area grew in October 1998 at an annual rate of 4.8%. This was 0.5 percentage point higher than in September 1998 (4.3%). The moderate increase in the 12-month growth rate of M3 in October 1998 mainly reflected a stronger demand for marketable instruments included in M3, in particular repurchase agreements, units/shares of money market funds and money market paper. The three-month moving average of the 12-month growth rates of M3 in August, September and October 1998 stood at a level of around 4.5%.
Taking a longer-term perspective, the available estimates show a steady pace of M3 growth of between 3.5% and 5.5% over the past two years. At its meeting on 1 December 1998, the Governing Council of the ECB concluded that this monetary trend appears to be broadly compatible with continued price stability in the euro area.
Further information can be found in the annex to this press release on the ECB website [pdf 9 kB].