M3 reached $126B Over the Period Ending March 24, 2022

M3 reached $126B Over the Period Ending March 24, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) significantly increased by LBP 164B ($109M) to stand at LBP 189,950B ($126B) by the week ending March 24, 2022. As such, on an annual basis, M3 retreated by 6.12% year-over-year and by 4.66% since year-start (YTD).

In details, M1 progressed by LBP 789B ($524M) by a week to settle at LBP 51,396B ($34.09B) by March 24, 2022. The rise is attributed to the increase in currency in circulation by LBP 985B and to a decrease in demand deposits by LBP 196B.

In turn, total deposits (excluding Demand deposits) decreased by $414.58M, owing to a decrease in Terms and saving deposits by LBP 289B ($191.7M). In the same token, deposits denominated in foreign currencies dropped by $223M.

As such, the rate of broad money dollarization decreased from 62.825% in the week ending March 17, 2022, to 62.594% by the week ending March 24, 2022.

Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 1.96% and 0.52% in March 2021 to 0.87% and 0.16%, respectively, in March 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 8.02% and 7.14% in March 2021 to 5.58% and 5.72%, respectively, in March 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 March 2022, M3 stood at $126.50B, 5.67% less than March 2021; NFA were $14.89B, less by 2.68% YOY; CPS was $25.29B, less by 22.93% YOY; NCPS was $29.87B, less by 25.17% annually; and OIN were $56.44B, higher by an annual 22.53%, 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 24, 2022, the Ministry of Finance (MoF) raised LBP 486.215B ($322.53M) through the issuance of T-Bills maturing in 6 months (6M) and notes maturing in 3 years (3Y). A higher demand was recorded on the 3 year notes which grasped 61.70% of total subscriptions, while the 6M T-bills accounted for the remaining shares of 38.30%. In more details, the yield on 6M stood at 4% while the coupon on the 3Y notes reached 5.5%.

Source: BDL; MoF

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