The annual growth rate of the broad monetary aggregate M3 stood at 2.0% in July 2011
The annual growth rate of the broad monetary aggregate M3 stood at 2.0% in July 2011, compared with 1.9% in June 2011, as announced by the ECB. Regarding the main components of M3, the annual growth rate of M1 decreased to 0.9% in July 2011, from 1.2% in June. In addition, the Governing Council of the European Central Bank (ECB) has decided, in agreement with the Bank of England, to extend the liquidity swap arrangement with the Bank of England up to 28 September 2012.
Compared with 1.9% in June 2011, the annual growth rate of the broad monetary aggregate M3 stood at 2.0% in July 2011. The three-month average of the annual growth rates of M3 in the period from May 2011 to July 2011 stood at 2.1%, compared with 2.0% in the period from April 2011 to June 2011. Broad money (M3) comprises M2 and marketable instruments issued by the Monetary Financial Institutions (MFIs) sector. Certain money market instruments, in particular money market fund (MMF) shares/units and repurchase agreements are included in this aggregate. A high degree of liquidity and price certainty make these instruments close substitutes for deposits. As a result of their inclusion, M3 is less affected by substitution between various liquid asset categories than narrower definitions of money, and is therefore more stable.
Besides, the annual growth rate of marketable instruments (M3-M2) increased to 0.9% in July, from -0.9% in June. Among the deposits included in M3, the annual growth rate of deposits placed by households stood at 2.1% in July, unchanged from the previous month, while the annual growth rate of deposits placed by non-financial corporations increased to 4.6% in July, from 4.3% in the previous month. Moreover, the annual growth rate of deposits placed by non-monetary financial intermediaries (excluding insurance corporations and pension funds) decreased to 5.3% in July, from 6.2% in the previous month.
On the other hand, in agreement with the Bank of England the Governing Council of the European Central Bank (ECB) has decided to extend the liquidity swap arrangement with the Bank of England up to 28 September 2012. The swap facility agreement established on 17 December 2010 had been authorised until the end of September 2011.