Money Supply

Money Supply means the ECB's monetary aggregates, stocks of short-term liabilities counted as money, for the euro area. It covers only the euro area and only holdings by residents outside MFIs and central government. It never covers the whole EU, and its composition changes as euro membership changes. It is a census-like full count, not a sample.

The series started in December 1998 and appears monthly. Headline M3 (broad money) reports annual growth; M1 (narrow money) holds cash plus overnight deposits, while M2 (intermediate money) adds short-term deposits. M3 adds market instruments: repos, fund shares and MFI debt securities up to 2 years; loans are counterparts, not money itself. Small MFIs keep derogations within 5% of national balance sheets, grossed up to full coverage in millions of euro.

The ECB publishes 'Monetary developments in the euro area' monthly at 10:00 Frankfurt time on the 19th working day after the reference month. Reference stocks are month-end balances, or the last working day when needed. National banks report by the 15th working day, so release day falls about 4 weeks after month-end.

Each release shows M3 and M1 annual rates with 3-month averages, component and counterpart contributions, three charts, annex tables and revisable dataset series. National banks stay embargoed until publication; routine revisions cover the prior period, larger fixes arrive quarterly, and rates use seasonally adjusted data.

M3 moves when households, firms and funds shift between cash, deposits and market instruments, or when counterparts expand or drain money.

• Currency in circulation: banknotes and coins held by the public, the cash leg of M1.

• Overnight deposits: demand balances used for daily payments, the other leg of M1.

• Deposits with agreed maturity up to 2 years: short-term time deposits in the M2-M1 block.

• Deposits redeemable at notice up to 3 months: short-term savings deposits in the M2-M1 block.

• Repurchase agreements and money market fund shares: repos plus money market fund shares in the M3-M2 block.

• Short-term bank debt securities: MFI debt securities up to 2 years, held by money holders.

The October 2022 example, published 28 November 2022: M3 growth fell to 5.1% from 6.3%, and M1 slowed to 3.8% from 5.6%. Other short-term deposits rose to 9.9% from 8.1%, while market instruments fell to 3.2% from 7.8%. M1 contributed 2.7 pp, down from 4.1, the M2-M1 block 2.2, up from 1.8, and market instruments 0.2, down from 0.4.

Among counterparts, credit to residents slowed to 5.0% from 5.5%, and net external assets scored minus 1.1 pp after minus 1.2. Adjusted loans to non-financial firms held at 8.9% unchanged, while household loans eased to 4.2% from 4.4%. Without a temporary clearinghouse deposit, September would have read around 5.8% before its October reversal.

1. Consolidation: Aggregate resident MFI balance sheets, cancel positions between banks, and count short-term liabilities to eligible money holders.

1. Transactions: Subtract reclassifications, revaluations and exchange-rate effects from the stock change to keep real flows. Example: 16,050 minus 16,000 minus 0 minus 2 minus 1 leaves EUR 47bn of transactions. Exchange-rate effects cover the pound, the dollar, the yen and the franc.

1. Notional index: Build a chain index with base 100 from transactions only: 47bn on 16,000bn lifts it from 120.00 to 120.3525. Annual growth compares the index with 12 months earlier: 120.3525 against 114.50 gives 5.11%. The base choice moves the level only, never growth.

1. Adjusted loans: Correct bank loans for off-balance transfers, derecognised stocks and cash-pooling nets to track true lending.

1. Seasonal adjustment: Adjust for seasonal and month-end calendar effects with X-12-ARIMA/X-13-ARIMA in two stages: pre-cleaning, then trend-seasonal split. Factors are multiplicative for all series but additive for net external assets. Models refresh yearly with 12 projected months; M1 runs high in December and cash peaks on Fridays.