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Liquidity, Money Multiplier Grow

Liquidity, Money Multiplier GrowLiquidity, Money Multiplier Grow

Liquidity increased to 6,407 trillion rials ($240 billion) in the month of Mordad (ending August 22) from 5,947 trillion rials at the end of last fiscal year (ending March 20), showing a 7.7 percent growth in five months, a central bank official said Saturday.

“Compared to the same month (Mordad) last year, liquidity growth is 30.2 percent,” said Abolfazl Akrami, director general for economic affairs at the Central Bank of Iran.

The recent rise is partly attributed to the inclusion of liquidity injected to the Iranian market by new financial and monetary institutes in CBI statistics.

At the end of last fiscal year, Iran’s liquidity increased by 29.1 percent.    

The monetary base experienced -4.9 percent growth rate in the first five months of the current year, reaching 1,100 trillion rials ($41.35 billion) from 1,151 trillion rials ($43.27 billion), while the money multiplier grew by 12.4 percent reaching 5.8 percent, at the same time, Akrami said.

Akrami added the money multiplier growth has been the main cause of the liquidity growth during the five-month period.

Monetary base is the total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank’s reserves.

 Money multiplier measures the maximum amount of commercial bank money that can be created by a given unit of central bank money.

Financialtribune.com