M3 reached $132.02B Over the Period Ending October 28, 2021

M3 reached $132.02B Over the Period Ending October 28, 2021

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 710B ($471M) to stand at LBP 199,024B ($132.02B) by the week ending October 28, 2021. As such, on an annual basis, M3 increased by 0.64% year over year and decreased by 0.11% since year-start (YTD).

In details, M1 retreated by a weekly LBP 422B ($280M) to settle at LBP 53,564B ($35.53B) by October 28, 2021. The contraction is attributed to the decrease in currency in circulation of LBP 564B while the demand deposits increased by LBP 142B.

In turn, total deposits (excluding Demand deposits) decreased by $190.73M, owing to a decrease in Terms and saving deposits by LBP 99B ($65.67M). In the same token, deposits denominated in foreign currencies regressed by $124M.

As such, the rate of broad money dollarization slightly increased from 61.93% in the week ending October 21, 2021 to 62.06% in the week ending October 28, 2021.

Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 3.35% and 1.15% in September 2020 to 1.53% and 0.26%, respectively, in September 2021. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.89% and 7.54% in September 2020 to 7.65% and 6.34%, respectively, in September 2021.

Analytically, the money supply M3 can be derived from combining the balance sheet of BDL with the balance sheet of banks to arrive at the monetary survey of the banking system. The resulting M3 would be equal to the sum of: net foreign assets (NFA), credit to the private sector (CPS), net credit to the public sector (NCPS), and other items net (OIN). Latest data show that in September 2021, M3 stood at $132.90, 1.51% more than September 2020; NFA were $14.97B, less by 20.83% YOY; CPS was $28.59B, less by 22.43% YOY; NCPS was $36.29B, less by 9.81% annually; and OIN were $53.03B, higher by an annual 51.95%, and comprising mostly (in BDL’s terminology) other assets which include open market operations and seigniorage, considered to be a controversial account by some.

In its treasury bills (T-Bills) auction dating October 21, 2021, the Ministry of Finance (MoF) raised LBP 69.281B ($45.95M) through the issuance of only notes maturing in 10 years (10Y) with coupon of 7% on the notes.

Source: BDL; MoF

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