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Bert Colijn, senior economist at ING, notes that Eurozone’s broad money supply (M3) increased from 5.1% year-on-year  in July to 5.7% YoY in August and that improvement was mainly driven by an acceleration in the narrow money supply M1.

Key Quotes

“The increase from 7.8% to 8.4% YoY is particularly noteworthy as real money supply is considered to be one of the best leading indicators for the eurozone economy. That said, the lag time is considerable, although  this does provide a somewhat rosier view on the economy a few quarters ahead.”

“At the same time, private sector borrowing also improved.”

“The months ahead will continue to be uncertain with economic risks to the downside prevailing, but the European Central Bank  will likely take this  data as  confirmation that expansionary policy is having some positive impact at a time  of slowing growth.”