Strengthening Corporate Credit And Shifting Asset Composition
European Central Bank reported that annual growth in the euro area’s broad monetary aggregate, M3, increased to 3.2% in March from 3.0% in February. The change reflects developments in corporate credit and adjustments in the composition of liquid assets across the euro area.
Evolving Dynamics In Narrow Money And Marketable Instruments
Growth in the M1 aggregate, which includes currency in circulation and overnight deposits, slowed slightly to 4.6% from 4.8% in February. At the same time, marketable instruments recorded a change in direction, rising to 4.5% in March from -1.3% in the previous month. In parallel, short-term deposits declined by 0.1%, indicating shifts in how liquidity is held.
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Robust Lending Activity And Corporate Balance Sheet Developments
Lending to non-financial corporations increased to 3.2% in March from 3.0% in February, pointing to continued demand for financing. Household lending remained stable, with growth holding at 3.0% for a second consecutive month. Alongside these trends, total claims on residents rose by 2.4%, supported in part by lending to general government.
Contributions To Overall Monetary Growth
Deposits from non-financial corporations increased to 4.6%, contributing to overall liquidity conditions. By contrast, deposit growth among investment funds outside the money market slowed to 3.3% from 6.2% in February. Data also show that claims on the private sector contributed three percentage points to M3 growth, while net external assets added 2.6 percentage points. At the same time, longer-term liabilities and residual factors reduced overall growth by 2.5 percentage points.
