[D3] Monetary aggregates

D3 MONETARY AGGREGATES

Financial aggregates are compiled by the RBA using data primarily supplied by authorised deposit-taking institutions (ADIs) and non-ADIs. The data for the levels of financial aggregates in Tables D2 and D3 are not adjusted for series breaks. The growth rates published in Table D1 are adjusted for these breaks, and accordingly are a better measure than growth rates calculated from this table.

Historical levels and growth rates for the financial aggregates are often revised owing to the resubmission of data by some financial intermediaries, the re-estimation of seasonal factors and the incorporation of securitisation data. The RBA credit aggregates measure credit provided by financial institutions operating domestically. They do not capture cross-border or non-intermediated lending.

From July 2019, the financial aggregates are compiled using an improved conceptual framework and a new data collection. This is referred to as the Economic and Financial Statistics Collection. Various movements from the June 2019 to July 2019 reporting periods are sizable, in part because the new data collection more consistently classifies loans according to their purpose. For more information, see Updates to Australia’s Financial Aggregates (available here <https://www.rba.gov.au/publications/bulletin/2019/mar/updates-to-australias-financial-aggregates.html>).

‘Currency’ comprises holdings of notes and coins by the private non-bank sector.

‘Transaction deposits with ADIs’ is defined as total transaction deposits at ADIs from the private non-ADI sector.

‘M1’ is defined as ‘Currency’ plus ‘Transaction deposits with ADIs’ (prior to July 2019, M1 was defined as ‘Currency’ plus only a portion of transaction deposits; the new definition brings M1 more in line with international reporting standards). From July 2019, the new framework for M1 was revised to April 2002 using historical data. Historical data are not available prior to April 2002, and so a conceptual level break in the series occurs at this period.

The sum of currency and transaction deposits does not add exactly to M1, which is due to a small portion of currency which is estimated to be held by non-residents and/or the government (these sectors are not included in the monetary aggregates). This estimate is based on those sectors’ relative shares of transaction deposits in all transaction deposits.

‘M3’ is defined as ‘M1’ plus all other deposits at ADIs (including negotiable certificates of deposits) from the private non-ADI sector.

‘Broad money’ is defined as ‘M3’ plus ‘Other borrowings from private sector by AFIs’.

‘Money base’ is defined as holdings of notes and coins by the private sector plus deposits of banks with the Reserve Bank and other Reserve Bank liabilities to the private non-bank sector.