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Abstract. This study presents the results of an empirical analysis of the demand for money in the European Union as a whole over the period 1971±1995, with a particular focus on the impact of ®nancial wealth. The empirical evidence shows a substantial impact of wealth on the demand for M2 and M3, whereas no in¯uence of wealth on the demand for M1 is found. This ®nding may explain the remarkable increase of the broad monetary aggregates over the last decade or so. This means that taking into account the growth of wealth, the monetary expansion has been fairly modest. The evidence thus indicates that the strong increase of M2 and M3 should be attributed to portfolio investment considerations rather than to an expansionary monetary policy.