M3 reached $127.35B Over the Period Ending July 21, 2022

M3 reached $127.35B Over the Period Ending July 21, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 565B ($374M) to stand at LBP 191,979B ($127.35B) by the week ending July 21, 2022. However, on an annual basis, M3 retreated by 4.72% year-over-year and by 3.65% since year-start (YTD).

In details, M1 retreated by LBP 295B ($196M) by a week to settle at LBP 58,262B ($38.65B) by July 21, 2022; due to a decrease in currency in circulation of LBP 385B, and an increase in demand deposits of LBP 90B.

In turn, total deposits (excluding Demand deposits) retreated by $178.53M, owing to a decrease in Terms and saving deposits by LBP 116B ($76.94M), and a decline in deposits denominated in foreign currencies by $101M.

As such, the rate of broad money dollarization increased from 59.986% in the week ending July 14, 2022, to 60.083% by the week ending July 21, 2022.

Looking at interest rates, the average rate on deposits in LBP and in USD, at commercial banks, decreased from 1.74% and 0.33% in July 2021 to 0.54% and 0.12%, respectively, in July 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.26% and 5.99% in July 2021 to 5.09% and 4.74%, respectively, in July 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 July 2022, M3 stood at $129.74B, 2.75% less than July 2021; NFA were $12.09B, less by 22.94% YOY; CPS was $22.98B, less by 22.92% YOY; NCPS was $29.66B, less by 15.95% annually; and OIN were $64.98B, higher by an annual 23.56%, 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 July 21, 2022, the Ministry of Finance (MoF) raised LBP 55.235B ($36.64M) through the issuance of T-Bills maturing in 3 months (3M) and notes maturing in 1 year (1Y). A higher demand was recorded on the 1 year notes grasped 64.10% of total subscriptions, while the 3 months T-Bills accounted for the remaining shares of 35.90%. In more details, the yield on 3 months stood at 3.50% whereas the coupon on the 1 year note reached 4.50%.

Source: BDL; MoF

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