money supply

In March, the rise in household deposits already observed in the previous month continued, whereas the total money supply declined as the deposits of businesses with banks dropped. The domestic loan balance continued to shrink as a result of both repayment of short-term loans and a bigger volume of loans written off at the end of the quarter.

In February, the rise in money supply was rather moderate: business deposits increased slightly whereas the rise in household deposits to a great degree corresponded to the drop in the amount of cash currency in circulation, thus having little effect on the total volume of money.  There were hardly any changes in the domestic loan dynamic: the repayments of household loans were behind a slight drop in total loan portfolio whereas lending to businesses remained the same month-on-month.

In January, the main factor behind decreasing money supply was a seasonal drop in demand for cash currency, yet a drop in household deposits also played a role. The trend observed until November of last year – a small increase in lending to businesses and a moderate drop in lending to households – returned to the overall dynamics of the domestic loan portfolio. That determined an overall small drop in domestic loans while the annual loan drop indicator improved to minus 10.4%.

The stable economic growth observed practically throughout 2012 has provided for a balanced increase both in deposits attracted by credit institutions and total money supply. As sharp fluctuations in the economic environment and particularly financial sector were not the case, the rise in money indicators in December was more moderate than at the end of 2011. The domestic loan portfolio shrank as is usual for December, yet the reduction was smaller than a year ago and was mostly determined by the repayment of short term loans in the non-financial business sector.

The production output indicators that grew throughout the year and are determined both by the increase in private consumption and export growth, promoted a rise in entrepreneurs’ deposits also in November, at the same time resulting in an increase in total money supply. The domestic loan portfolio shrank slightly, with the loans granted to domestic non-financial enterprises almost unchanged but the household loan portfolio decreasing.

A substantial rise in the deposits by non-financial businesses was observed in October, determining a rise in total money supply. The demand for cash currency meanwhile dropped somewhat. The total domestic loan portfolio remained almost unchanged, with the loans granted to domestic non-financial enterprises continuing to rise and household liabilities dropping.

Some monetary indicators decreased, but the decrease was negligible and did not affect the overall money supply situation in September. At the same time, demand for cash currency grew, and so did both the balance of loans granted to non-financial enterprises and the overall portfolio of lats loans.

Along with the stable growth of the economy, including the financial sector, a moderate rise in monetary indicators resumed in Latvia in August.  Both the deposits attracted by credit institutions and volume of cash currency and the total balance of domestic loans grew.

The changes in monetary indicators were small in July, reflecting the moderate drop in household deposits and rise in cash currency characteristic of the summer season. As a result of the impact from the lower base, the deposits annual change indicator returned to positive for the first time since last autumn.