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Money supply M3 increased: National Bank of Poland

The National Bank of Poland has published data on the money supply in April, which shows that the value of the M3 money supply amounted to PLN 2,147.5 billion and was PLN 7.3 billion higher than at the end of March this year. According to the Bank, the higher figure was mainly driven by an increase in the value of deposits and other liabilities to the household sector.

In order to obtain a full picture of what this represents, a few terms need to be clarified. Monetary aggregates refer to the amount of money in circulation in the economy. In the euro area, the European Central Bank (ECB) defines three monetary aggregates.

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The M3 aggregate is one of the basic measures of the money supply in an economy and is considered the best indicator of the quantity of domestic currency. For the euro area, the M3 aggregate is the most important aggregate. The monetary analysis of the European Central Bank includes a regular assessment of the dynamics of the broad M3 aggregate and a range of other monetary and financial variables. Changes in the M3 creation factors (such as cash in circulation or time deposits) are taken into account because they reflect the dynamics of the aggregate as a whole. This is an important element of the European Central Bank’s monetary policy.

As per National Bank of Poland, “In April 2023, the value of deposits and other liabilities included in the M3 money supply in the household sector increased by PLN 14.8 billion,( or 1.3%), to PLN 1,131.5 billion, while in the non-financial corporate sector it decreased by PLN 5.5 billion, (or 1.2%), to PLN 461.8 billion.”

The debt of other financial institutions fell by PLN 4.2 billion, (or 2.0%), to PLN 203.5 billion; households by PLN 1.0 billion, (or 0.1%), to PLN 780.6 billion; and non-financial corporations by PLN 0.9 billion, (or 0.2%), to PLN 425.4 billion.

“Central government net debt decreased by PLN 14.9 billion, (or 4.1%), to PLN 348.5 billion” indicated the Bank.

On the other hand, at the end of March 2023, the value of the M3 money supply stood at PLN 2 trillion 140.2 billion, 8.9 billion higher than at the end of February 2023.

Money Supply M3 in Euro Area is expected to be EUR 16,294,454 million by the end of this quarter, according to Trading Economics global macro models and analysts expectations.

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