Developments in the monetary indicators con-
tinue to provide no indication of a growing
need for monetary policy action.
The broad M3 monetary aggregate rose considerably in the
second quarter against the backdrop of histor-
ically low interest rates and the continued
moderate economic recovery in the euro area.
One growth driver was a marked increase in
loans to the private sector; lending to domestic
non- fnancial corporations and households
especially thus remained on an upward trajec-
Nonetheless, the mainstay of monetary
expansion was once again securities- based
lending to general government by the MFI sec-
tor, fuelled largely by the Eurosystem’s govern-
ment bond purchases.
However, the direct
boost from the securities purchases on the
money stock was partly offset by outflows of
funds from the euro area as foreign investors
offloaded euro-area bonds on balance and
euro-area investors continued to purchase for-
eign debt securities.