Money growth in Europe before the global financial crisis (GFC) has been significantly above the reference rate initially set by the European Central Bank (ECB).

After the GFC, it is significantly below it.

                                                 M3 Growth
                        1999-2008     Reference     2009-2018

Eurozone                    7,7            4,5              2,9

UK                                 9,4             –               3,8

US                                  6,4             –               6,2

Sources: 

Organization for Economic Co-operation and Development, M3 for the Euro Area [MABMM301EZA657S], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MABMM301EZA657S, April 6, 2019.

Organization for Economic Co-operation and Development, M3 for the United Kingdom [MABMM301GBA657S], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MABMM301GBA657S, April 7, 2019.

Organization for Economic Co-operation and Development, M3 for the United States [MABMM301USA189S], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MABMM301USA189S, April 6, 2019.

Averages over the two ten year periods are simple arithmetic averages and are author’s calculations. The OECD tells it  uses M2 as a proxy for M3 in US, since it is not published after 2006 any more.

A similar pattern is observed in UK.   Remarkably high money growth before the GFC and a noticeably low one after the GFC.

In the US, however, the average broad money growth both before and after the GFC were very similar at slightly above 6 percent.  This rate seems comfortable enough to accommodate a real GDP growth of around 3 percent, a price inflation of 2 percent and an additional increase in real money demand of 1 percent per annum.

Why did a similar outcome fail to realize in the Eurozone, where the ECB did have an initial emphasis on a monetary pillar around a reference broad money (M3) growth rate of 4,5 percent?

Why did the ECB stop mentioning the 4,5 percent reference rate after the Spring of 2003?

Why does broad money growth in the Eurozone fall short of 4,5 percent recently?

These are good questions to think about.