Liquidity doubled in Saudi economy “M3 money supply” nine times in 29 years, as it recorded its highest levels ever at the end of December 30, 2021, compared to about 228 billion riyals at the end of 1993.
According to the monitoring unit of the reports in the newspaper “Al-Iqtisadiah”, and based on the data of the Saudi Central Bank “Sama”, the liquidity of the local economy has increased by 7.3% (158 billion riyals) since the end of 2020, when it was 2.149 trillion riyals.
The money supply also increased by 16.2% (322 billion riyals) from its levels before the outbreak of the Corona pandemic, which amounted to 1.985 trillion riyals at the end of 2019.
Increasing the money supply and lowering interest rates, an “expansionary monetary policy”, contributes to enhancing aggregate demand, which supports GDP and employment, which is a useful policy to reduce unemployment and the economic downturn expected to extend to most countries in the world with the Corona pandemic.
And in early June 2020, the Saudi Central Bank announced that it would pump 50 billion riyals to support liquidity in the banking sector to enable it to continue financing the private sector.
He said, “This liquidity will enhance the role of banks in modifying or restructuring their financing without any additional fees, and support plans to maintain employment levels in the private sector, in addition to exempting a number of fees for electronic banking services.”
And “M3 money supply” is the sum of “cash in circulation outside banks”, “demand deposits”, “time and savings deposits”, and “other quasi-monetary deposits”.
And “other quasi-cash deposits” are, residents’ deposits in foreign currencies, deposits against letters of credit, existing transfers, and “repo” operations, which banks have implemented with the private sector.
Over the course of 29 years, the “M3 money supply” has witnessed annual growth, so that it doubled more than nine times during that period, as it was about 228 billion riyals in 1993, while it ended in 2021 at 2.307 trillion riyals.
During the period from 1993 to 2008, the “money supply” did not exceed one trillion riyals, while it exceeded it at the end of 2009 to reach 1.029 trillion riyals.
Since 2009, the “money supply” has not exceeded two trillion riyals, except during 2020, recording 2.009 trillion riyals at the end of March, and since the week ending on May 7, 2020, the money supply has remained above two trillion riyals until the end of 2021 at 2.307 trillion riyals. .
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