In order to make an assessment of the monetary situation in the euro area, however, it is not enough to compare current monetary growth with the reference value. What is needed is an in-depth study of the factors underlying monetary growth.
Monetary analysis is an important aid to that.
This balance sheet-based analysis is used to indicate the economic determinants of the given economic situation. The harmonisation of the money and banking statistics in the euro area and the new definition of the monetary aggregates have meant some modifications for monetary analysis compared with the former practice of the Bundesbank. These modifications are the subject of the present article, which concentrates on questions of methodology. There is also a brief examination of monetary trends in the euro area, which reveals that neither inflationary nor deflationary risks are emanating from the monetary side at present.