The income velocity of circulation has been subject to a trend decline in all the member states of the European Monetary Union since its inception. In this paper, we propose an explanation for this in terms of a measure of the ECB’s inflation fighting credibility. This credibility gain...

Developments in broad money since the start of the new millennium cannot be explained by the traditional determinants of money demand, namely, income, prices and portfolio effects. Households’ direct and indirect participation in financial markets have led to the widespread democratisation of...