Euro zone: What accounts for the money creation?

We look at the trend in the M2 money supply in the euro zone, i.e. the money held by non-bank economic agents. The creation of this money can have two origins: Lending by banks; Purchases of financial assets (mainly government securities) by the central bank from non-bank economic agents, which takes place when there is quantitative easing. As the euro zone is in a flexible exchange-rate regime and does not accumulate foreign exchange reserves, there is no money creation in the euro zone caused by relations with the rest of the world. Empirically, we see that the euro zone’s money creation is explained by: From 1999 to 2008: lending; Since 2009: bond purchases by the ECB. In the quantitative easing period we were therefore in a situation close to "100 % money" in the euro zone, where the entire money creation was generated by the central bank and not by banks.