The Monetary Policy Council will keep a close eye on other indicators, including all leading indicators of changes in prices, such as capacity utilization rates, production costs, developments in incomes and commodity prices. The Monetary Policy Council will also monitor long-term interest rates and the current account balance. * *  *  These decisions call for two remarks. First, on a technical level, the Monetary Policy Council has decided to monitor several narrow and broad money aggregates simultaneously in order to obtain a concise estimate of all monetary developments. As we have seen, certain data, and particularly, but not exclusively, M3 data, have been severely disrupted recently by several factors, such as the very substantial fall in short-term rates and the ensuing large-scale reallocation of investment flows towards non-monetary assets, higher taxes on money market mutual funds, and the continuing very high level of interest paid on housing saving plans. We will therefore keep a very close eye on the M1, M2, M3, and M3+P1 aggregates as expressions of the underlying growth of the money supply. Particular attention will be paid to the growth of the M3+P1 aggregate covering monetary assets and contractual savings. A very large proportion of the outflows from M3 in the past year was directed towards investments covered by P1, and particularly housing savings plans with a residual maturity of one year or less. In fact, this type of investment at present constitutes a very close substitute for monetary assets.
The objective of a stable external value of the French franc vis-à-vis the most credible currencies in the European Exchange Rate Mechanism was met. BIS Review 2/1997  -2-  Since the beginning of 1996, the franc has continued to move gradually closer to its central rates against the other currencies in the European Exchange Rate Mechanism. This firmness of the franc has gone hand in hand with the continuing overall competitiveness of the French economy. The real effective exchange rate of the French franc has improved and exports, as in previous years, helped to boost activity. The seasonally-adjusted current account surplus for the first nine months of 1996 stood at almost FRF 84 billion. This was much greater than the FRF 64 billion surplus posted for the same period of 1995. On the basis of current forecasts, France will record the third largest current account surplus in the world for 1996. Growth in the M3 reference aggregate, which is the reference for our internal intermediate objective, showed a reversal in its trend. The expansion of M3 at the end of the third quarter of 1995 was close to its medium-term growth target path of 5%, but subsequently slowed sharply. The twelve-month increase of 4% in December 1995 gave way to a contraction of 0.4% in October 1996, the last month for which figures are available.