Money in Circulation Stabilized, Drop in Lending Abating

Riga, June 18, 2010. By Latvian Institute

On June 18, the Bank of Latvia released analytical accounts of the banking sector showing that in the conditions of a low domestic demand persisting on the one hand and confidence level improving and production volumes in the exporting sectors growing on the other, the developing situation in the Latvian economy has also stabilized money in circulation.
In May 2010 the M3 money indicator that characterizes the volumes of both cash currency and non-cash currency in the economy remained almost unchanged whereas the rate of M3 annual growth continued to increase reaching 4.9%. Vilnis Purviņš, Bank of Latvia Economics Expert, explained: “The volume of money in May was little affected by the changes of cash currency in circulation: it increased by only 0.2%. The rate of increase of domestic deposits was a little faster (0.4%), with the increase determined by the increase in lats deposits both by enterprises and households, but the balance of euro deposits decreased.”
Purviņš prognosticated: “The stabilization trends in the economy will determine a moderate growth in money supply in the coming months as well. It will be promoted also by a gradual increase in lending activity both in the business sphere and in regard to households that are confident in their financial sustainability.”

For further information see:
http://www.bank.lv/eng/main/all/statistics/imf/sdds/aabnksct/

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