Banca Naţională a României

At end-January 2000, broad money stood at lei 129,446 billion. A 3.5 percent drop (7.7 percent in real terms) was recorded as a result of some seasonal factors (reduction of currency in circulation and decline of demand deposits) and incidental factors (attraction of household savings and deposits of economic agents by the Ministry of Finance via government securities issues).

Net foreign assets stepped up 0.7 percent (to lei 41,733 billion) due solely to the depreciation of the exchange rate of domestic currency. Net domestic assets dropped 5.3 percent (to lei 87,713 billion) sequel to the following developments: the 1.5 percent growth in domestic credit, that ran at lei 102,069 billion, and the change in other assets, net, that posted a deficit of lei 14,356 billion against a deficit of lei 7,890 billion in December 1999. The deficit recorded by other assets, net show that in transit accounts and interests payable returned to their typical monthly values.

The 3.6 percent rise in credit to non-government, which amounted to lei 59,861 billion, was due to both the growth of credit in lei (by 4.9 percent) and the expansion of forex credit (by 2.7 percent). Credit to government, net, declined by 1.3 percent (to lei 42,208 billion) as a result of the redemption of some forex-denominated government securities (USD 152 million) and full repayment of banks’ deposits placed with the General Account of Treasury.

Development of broad money components indicated the delay in the restoration of demand for money. M1 fell 16.4 percent (to lei 24,808 billion) following the (seasonal) reduction by 9.6 percent in currency in circulation, which totalled lei 15,711 billion, while quasi-money went up by a mere 0.2 percent, amounting to lei 104,637 billion. Household savings picked up 3.8 percent (to lei 40,375 billion). Their share in broad money increased from 29.3 percent in December 1999 to 31.5 percent in January 2000. Residents’ forex deposits dropped by 1.3 percent, equalling lei 49,802 billion. Household forex deposits denominated in lei further posted a decline in growth rate, from 6.1 percent in December 1999 to 4.3 percent in January 2000. The declining growth rate of savings with the banking system were attributable mainly to the fact that interest rates on government securities issued by the Ministry of Finance in January were higher than interest rates applied by banks to non-bank clients’ deposits.