MONETARY AGGREGATES IN THE MONETARY-POLIC Y OF SELECTED COUNTRIES

Monetary aggregates started to play a very important role in central b anks' monetary policies from the second half of the seventies, followi ng the first ''oil shock''. More than one hundred central banks from b oth developed and developing countries devised rather sophisticated sy stem during the eighties. The central banks began to use monetary aggr egates as their intermediate targets at that time. The number, structu re, and role of monetary aggregates gradually developed over the last twenty years. The main factors influencing the development of monetary aggregates were: The development of money markets, the deregulation o f both financial markets and banking systems, the implementation of ne w technologies in the banking industry, the disharmony between the dev elopment of monetary aggregates and basic macroeconomics indicators, a nd the improvement of statistics. During this development the systems of monetary aggregates were simplified and the numbers of monetary agg regates were reduced significantly in most countries. Currently most c entral banks use one narrow monetary aggregate and one or two broader ones. The aggregate structure has been adapted to developing of the fi nancial markets, and any new financial facilities were included in var ious countries. Therefore, monetary aggregates of different central ba nks vary significantly. The examples of five representative countries (Italy, Germany, Austria, USA, and the United Kingdom) seen to show th is result. Monetary aggregates of the central banks in Germany and Aus tria mostly concentrate on money in circulation and traditional sight and demand deposits. Monetary aggregates in other countries also inclu de other items (for example, securities issued by banks and savings ba nks in the United Kingdom, etc.). Not only the structure but also the role of monetary aggregates varies a great deal from country to countr y.For example, monetary aggregates are important as an intermediate ta rget in Italy and Germany (specifically the broad monetary aggregate - money supply). Central banks in other countries (Austria, etc.) use t hese monetary aggregates as indicators. With the advent of a single cu rrency in the European Union, the new situation will be also reflected in the role of monetary aggregates in a common monetary policy. Price stability will be the final goal of European Union in any case. This goal may be reached either through a policy of direct inflation target ing or through implementing money supply as an intermediate target. Th e final solution is not clear enough at this moment. It seems clear, h owever, that monetary aggregates will play a significant role in the E uropean Union's common monetary policy, as either an intermediate targ et or an indicator.