Full text of H.6 Money Stock Measures : August 18, 1969

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s t a t i s t i c a l

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r e l e a s e

H.6

For

immediate release
August

18, 1969

E f f e c t i v e in the latest w e e k ending A u g u s t 6, the demand deposit component
of the money supply w a s increased substantially due to a change in accounting procedures associated w i t h b a n k clearings of E u r o - d o l l a r transactions.
Previously,
a n increasing volume of such transactions resulted in increases in cash items in
process of collection w i t h o u t increasing demand d e p o s i t s .
Since cash items are
deducted from gross d e p o s i t s in computing the money supply, the effect has been
to understate the net d e p o s i t concept measured in the money supply by an increasing
amount in recent y e a r s .
A tentative r e v i s i o n has b e e n made in the data below and
in the appended tables to correct for the estimated downward bias in the series
from June 1967-July 1969.
Further revisions w i l l be completed in the near future,
reflecting new b e n c h m a r k s and changes in seasonal factors w h i c h are incorporated
in the series a n n u a l l y .
T h e revised money supply series is shown to have increased over the first
seven months of 1969 at an annual rate of 4 per cent, compared to 2 . 4 per cent rate
indicated by the old series . In the w e e k ending A u g u s t 6, the money supply averaged
about $ 5 0 0 m i l l i o n b e l o w the July level. Time and savings deposits declined further
in the latest w e e k to a level $1.7 billion below the July average.
MONEY SUPPLY AND TIME DEPOSITS
(Averages of daily figures, in billions of d o l l a r s )
Seasonally adjusted

Money Supply
Period

Total
— ( r Pv i

^

•—

Currency
component

|
i

Demand deposit
component
(v

A i| i n

\

Time deposits
adjus ted
(All commercial
banks)

1969--January
February
March
April
May
June
July p

195.4
195.7
195 .9
197.5
197.4
198.2
199.1

43.6
43.9
44.2
44.2
44.6
44 .9
r 45.2

151.9
151.8
151.7
153.3
152.9
153.3
154.0

202 .5
201 .0
201.0
200.8
200.1
199.2
r 195.8

W e e k ending:
1969--July
2
9
16
23
30 p

199.2
199.8
199.0
198.7
198.2

45.1
45 .1
45 .0
45 .2
45.2

154.1
154.7
154 .0
153 .5
153 .0

198.0
196
r 196.u
145 . i
1 94 .7

198.6

45.3

153.3

1 94 . 1

198.6

45.2

153.5

195 .0

Aug.

6 p

A v e r a g e of last 4 w e e k s
Preliminary.
Digitizedpfor-FRASER


r - Revised.

^ V I S E D SKR1ES

August 14, 196 9

Money Supply

1 Related Data 1967-1969

(hijliwns of d o l l a r s )
Not Seasonally Adjusted
Seasonally Adji.5 ted
U.S.
Money Supply
Money Supply
Governmei it
1 Demand
Time
|Ti,
Demand
Demand
1
Currency iQepos it
Deposits
1Currency Depos it
|Dciics;ts
C o m p o n e n t | C o m p o n e n t [ A d j u s t e d 1/[Total 1 Component:Component Adjusted 1, Deposits i/
Total

|

|

1'67
J u 1 ' ivi i \
February
March
April
May
June
July
August
September
October
November
December
1968
January
February
March
April
May
June
July
August
September
October
November
December




170.3
171,8
173.2
172.5
174.4
176.0
177.9
179.1
179.3
180.4
181.3
181.7

182.7
183.1
183.9
184.7
186.7
188.1
190.2
191.2
190.6
191.5
193.3
194.5

1/

38.5
38,7
38.9
39.0
39.1
39.3
39.4
39.5
39.7
39.9
40.1
40.4

131.8
133.0
134.3
133.5
135.5
136.7
138.5
139.5
139.6
140.5
141.3
141.3

161 .0
163.5
165.9
168.1
170.1
172.6
174.8
177.2
179.4
180.6
182.0
183.5

175.3
170.6
171.9
173.6
171.0
174.3
175.8
175.9
178.5
180,8
182.7
187.5

38.5
38.3
38.5
38.6
38.8
39.2
39.6
39.6
39.7
40.0
40.4
41.2

136.8
132.2
133.4
134.9
132.2
135.1
136,3
136.3
138.7
140.8
142.2
146.2

160.6
164.0
166.7
168.8
170.8
173.0
175.2
177.8
179.0
180.4
181.3
182.0

,2
5.1
4.9
4.8
6.6
4.0
5.7
4.3
5.0
6.3
5.3
5.0

40.6
40.7
41.1
41.4
41.6
42.0
42.2
42.6
42.7
42.8
43.2
43.4

142.1
142.4
142.8
143.4
145.0
146.0
148.0
148.6
147.9
148.7
150.1
151.1

184.1
185.2
186.7
187.1
187.6
188.2
190.4
193.8
196.6
199.5
201.9
204.3

188.0
181.8
182.5
186.0
183.0
186.2
188.0
187.8
189.7
191.8
194.8
200.7

40.5
40.3
40.7

147.5
141.5
141.8
145.0
141.7
144.3
145.7
145.2
147.0
149.0
151.2
156.-

183.7
185.8
187.7
187.9
188.4
188.6
190.8
194.4
196.2
199.1
200.7
202 .5

5.0
7.2
6.6
4.2
6.4
5.4
5.7
5.5
5.9
6.1
4.2
4.8

A t all commercial b a n k s .

41.1
41.3
41.9
42.4
42.7
42.7
42.9
43.7
44.3

•

4

•

E X P L A N A T O R Y NOTE

Following is an expanded e x p l a n a t i o n of the revision in the statistics
on money supply and related m e a s u r e s incorporated in the previous release dated
A u g u s t 14, 1969.
That r e v i s i o n w a s necessitated by a change in the Board's Regulation D , effective July 31, requiring member banks to include all "bills payable
checks' and so-called "London checks" originating from transactions with foreign
branches as deposits subject to reserve r e q u i r c v n t s .
The addition of th^se itcmn to
b 'rJ ciposits does not ro:x:l i tulc
a redefinition of the m o n e y buriJ; / to en io.:,: . .r, u i:r oadcr concept.
T:i .!.• .i.uid
deposit component of m o n e y su;, ly con:iLts oi
demand deposits of private
The
non-bank h o l d e r s less cash itc:,: in process of collection by the banks.
Board's redefinition of cross demand d e p o s i t s is intended to compensate for an
overstatement of cash items in process of an equal amount generated by transactions with foreign branches v;td involving r-ainly the borrowing and repayment
of E u r o - d o l l a r s .
The cash if:o:n', so g e n e r a t e d , in the Board's opinion, represented an unwarranted r e d u c t i o n in r e s e r v e requirements to the extent that they
w e r e not matched by deposit ite. x; subject to reserve.
T h u s , the effect of the
regulatory change is to reestablish the identity in treatment of gross demand
deposits and cash items in this r e s p e c t , leaving net demand deposits and the
concept of m o n e y supply unchanged.
The rapid growth in Eero-dollar transactions, and in the volume of
associated cash items, over recent years-- "-vl particularly during the first
seven m o n t h s of 1969-- had resulted in an ineLv^s iur; dow.T:>a::d bias in net demand deposits according to the traditional dciini v.
downward bias w a s
abruptly eliminated in the f i r e : w e e k in A u g u s t and, in &n e e c c r t to m a i n t a i n
continuity in the statistical series, the Federal Reserve obtr-in^d retrospective
data from the member banks m o s t affected in order to correct the figures on
money supply and related m e a s u r e s published earlier. Adjustment for the overstatement of cash items resulted in a somewhat faster growth rate in money
supply over the period.
For the interval from December 1968 to July 1969, for
example, the money supply is now shown to h a v e grown at a 4.1 per cent annual
rate, as compared to the 2.4 per cent rate of increase indicated earlier.
This correction is not to b e confused with the regular annual revision
of money supply s t a t i s t i c s , which will be forthcoming in September.
That rev i s i o n , as usual, w i l l incorporate a d j u s t m e n t s indicated by benchmark data
(some of which is n o t yet a v a i l a b l e ) for m e m b e r and non-member banks combined
and new seasonal factors w h i c h w i l l take account of the month-to-month variation
observed d u r i n g the past year.

August: 21,

1969.