Monetary supply growth rate in 2012 has sharply fallen down

In absolute terms, the growth of ruble monetary supply (M2) made Rb 2.9 trillion, while accounts and deposits in foreign currency increased by another $26bn. Compared with the last year, the nominal growth of ruble monetary supply decreased 1.5-fold, whereas the foreign exchange component of broad monetary supply has increased three-fold.

General slowdown in monetary supply dynamics is based, firstly, on a reduced transaction demand for money on the part of businesses and organizations. The volume of corporate sector current accounts has decreased by Rb 11bn (0.2%) over the year, and their share in GDP declined from 8.5% to 7.6%. The growth rate of the ruble funds of legal entities has slowed down by more than four times, from 26.0% in 2011 to 6.4% in 2012.

Secondly, the growth of cash has slowed down. Its growth rate (M0) has reduced more than twice. Within a year it increased only by 8.3% against 17.3% in 2011.

Growth in demand for money from the population remains most stable. The volume of ruble accounts and deposits increased in 2012 by 19.0%, which is only by 3.4 p. p. lower than in 2011.

We should also note that the increase in monetary supply in broad definition (Rb 3.5 trillion) in 2012 made only 67% of the bank loans growth (Rb 5.2 trillion). Herewith, balances of budgets of all levels with the banks and the Bank of Russia, which are not included in the estimates of the monetary supply have increased by Rb 950bn.

Key monetary aggregates dynamics as of the year end, Rb bn

M.Yu. Khromov, Leading Expert of Structural Policy Center