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Liquidity Up, Monetary Base Falls

Liquidity Up, Monetary  Base Falls Liquidity Up, Monetary  Base Falls

The recent rise in liquidity stems from a government policy to increase the inside money and money multiplier, while the monetary base is negative, said an official with the central bank.

Abolfazl Karami, director general for economic affairs of the Central Bank of Iran, said that liquidity hit over 6 trillion rials in the month of Tir (June 22 - July 22), showing a growth rate of 5.8 percent. 

The rise in liquidity, however, is mainly due to the money multiplier growth, which has increased with a 12.4 percent rate, Karami said, while the monetary base is at a current level of -5.9.

A money supplier is defined as the mathematical relationship between the monetary base and the supply of money in an economy. It explains the increase in the amount of cash in circulation generated by the banks’ ability to lend money out of their depositors’ funds.

 

Financialtribune.com