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Financial intermediaries

We can divide financial intermediaries into two categories:

  • monetary financial institutions (MFIs), and
  • other financial intermediaries (OFIs).


MFIs include the Eurosystem (ECB and the NCBs of those countries that have adopted the euro), credit institutions and non-credit institutions (mainly money market funds) whose business is to receive deposits from entities other than MFIs and to grant credit and/or invest in securities.

Number of euro area monetary financial institutions
(end of year) 1998 2000 2002 2004 2006 2008 2010 2012
Central banks 12 13 13 13 13 16 17 18
Credit institutions 8,320 7,521 6,906 6,406 6,130 6,570 6,334 6,019
Money market funds 1,516 1,651 1,620 1,670 1,470 1,721 1,474 987
Other institutions * 8 8 5 6 3 3 3 35
All MFIs 9,856 9,193 8,544 8,095 7,616 8,310 7,828 7,059
Source: ECB.
*In May 2011 the new ELMI classification became applicable, leading to an increase in the number of Other Financial Institutions.

Consolidated balance sheet of MFI sector

MFIs regularly report data on their assets and liabilities tthe ECB and the NCBs. These data are used to compute the consolidated balance sheet of the MFI sector.

The chart below shows the composition of the consolidated balance sheet of the euro area MFI sector at the end of 2012. Deposits are the most important liability item, while loans represent the largest share of total MFI assets.

Composition of the consolidated balance sheet of the euro area MFIs (including the Eurosystem) at end-2012

(percentage shares in the balance sheet total)

The consolidated MFI balance sheet represents the basis for the computation of some of the key monetary and credit variables regularly monitored at the ECB. In particular, this balance sheet is used to calculate the euro area monetary aggregates.

Schematic consolidated balance sheet of the MFI sector for the euro area ( 1 )
Assets Liabilities
1. Loans 1. Currency in circulation
2. Securities other than shares 2. Deposits of central government
3. Shares and other equities 3. Deposits of other general government/other euro area residents
4. External assets 4. Money market fund shares/units and money market paper
5. Fixed assets 5. Debt securities issued
6. Remaining assets 6. Capital and reserves
  7. External liabilities
  8. Remaining liabilities
1A detailed description of the instrument categories is provided in Annex 4 of the ECB publication: "The single monetary policy in Stage Three: General documentation on ESCB monetary policy instruments and procedures".

Trends in monetary aggregates are important sources of information about future inflation and economic activity.

The chart below shows the composition of the monetary aggregate M3 at the end of 2012.

As the definition of monetary aggregates adopted by the ECB only includes liabilities of MFIs located in the euro area vis-à-vis the euro area resident money holding sector, the monetary aggregate M3 comprises:

  1. short-term deposits with euro area MFIs,
  2. shares/units issued by money market funds located in the euro area, and
  3. debt securities issued with a maturity of up to and including two years by MFIs located in the euro area.

Thus, holdings of these instruments by non-residents, MFIs or the central government are not included in M3. Currency in circulation not held by euro area MFIs is entirely included in the monetary aggregates, irrespective of whether it is held by euro area residents or non-residents, given the difficulty of deriving accurate and timely measures of the amounts of banknotes and coins held by non-residents.

Other financial intermediaries (OFIs)

A corporation or quasi-corporation other than an insurance corporation and pension fund that is engaged mainly in financial intermediation by incurring liabilities in forms other than currency, deposits and/or close substitutes for deposits from institutional entities other than MFIs, in particular those engaged primarily in long-term financing, such as corporations engaged in financial leasing, financial vehicle corporations created to be holders of securitised assets, financial holding corporations, dealers in securities and derivatives (when dealing for their own account), venture capital corporations and development capital companies.

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