M3 reached $126.25B Over the Period Ending March 10, 2022

M3 reached $126.25B Over the Period Ending March 10, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) significantly decreased by LBP 3,085B ($2,046M) to stand at LBP 190,328B ($126.25B) by the week ending March 10, 2022. As such, on an annual basis, M3 retreated by 6.09% year over year and by 4.47% since year-start (YTD).

In details, M1 contracted by LBP 2,767B ($1,835M) by a week to settle at LBP 50,629B ($33.58B) by March 10, 2022. The decline is attributed to the decrease in currency in circulation by LBP 3,096B and to an increase in demand deposits by LBP 329B.

In turn, total deposits (excluding Demand deposits) decreased by $211.06M, owing to a decrease in Terms and saving deposits by LBP 107B ($70.97M). In the same token, deposits denominated in foreign currencies dropped by $140M.

As such, the rate of broad money dollarization decreased from 61.974% in the week ending to March 03, 2022, to 61.868% by the week ending March 10, 2022.

Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 2.11% and 0.54% in February 2021 to 0.99% and 0.17%, respectively, in February 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 6.52% and 6.92% in February 2021 to 5.69% and 5.5%, respectively, in February 2022.

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 February 2022, M3 stood at $128.91B, 4.23% less than February 2021; NFA were $15.21B, less by 5.54% YOY; CPS was $26.04B, less by 23.49% YOY; NCPS was $30.57B, less by 24.46% annually; and OIN were $57.07B, higher by an annual 29.78%, 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 March 10, 2022, the Ministry of Finance (MoF) raised LBP 410.619B ($272.38M) through the issuance of T-Bills maturing in 6 months (6M) and notes maturing in 2 years (2Y). A higher demand was recorded on the 6 month T-Bills which grasped 51.29% of total subscriptions, while the 2Y notes accounted for the remaining shares of 48.71%. In details, the yield on 6M stood at 4% whereas coupon on the 2Y notes stood at 5%.

Source: BDL; MoF

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