M3 reached $126.93B Over the Period Ending September 15, 2022

M3 reached $126.93B Over the Period Ending September 15, 2022

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by LBP 630B ($418M) to stand at LBP 191,344B ($126.93B) by the week ending September 15, 2022. However, on an annual basis, M3 retreated by 4.61% year-over-year and by 4.41% since year-start (YTD).

In details, M1 declined by LBP 747B ($495M) by a week to settle at LBP 60,070B ($39.85B) by September 15, 2022; due to a decrease in currency in circulation of LBP 749B billion and an increase in demand deposits of LBP 2 billion.

In turn, total deposits (excluding Demand deposits) increased by $77.43M, owing to a drop in Terms and saving deposits by $13.26M (LBP 20B) while deposits denominated in foreign currencies added $91M.

As such, the rate of broad money dollarization increased from 59.058% in the week ending September 8, 2022 to 59.324% in the week ending September 15, 2022.

Looking at interest rates, the average rate on deposits in LBP at commercial banks decreased from 1.53% in September 2021 to 0.66% in September 2022. Similarly, the average rate on deposits in USD at commercial banks decreased from 0.26% in September 2021 to 0.09% in September 2022. In its turn, the average lending rate in LBP and USD, at commercial banks, went down from 7.65% and 6.34% in September 2021 to 5.09% and 4.61%, respectively, in September 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 September 2022, M3 stood at $138.45B, 4.17% higher than September 2021; NFA were $10.98B, less by 26.63% YOY; CPS was $21.97B, less by 23.14% YOY; NCPS was $27.25B, less by 24.91% annually; and OIN were $78.24B, higher by an annual 47.52%, 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 September 15, 2022, the Ministry of Finance (MoF) raised LBP 36,940M ($24.50M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year (1Y).  A higher demand was recorded on the 3M notes which grasped 59.84% of total subscriptions, while the 1Y notes accounted for the remaining shares of 40.16%. In more details, the yield on 3 months stood at 3.50%, while the yield on the 1 year (1Y) reached 4.50%.

Source: BDL; MoF

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