Monthly Monetary Report

Monthly report on the evolution of the monetary base, international reserves and foreign exchange market.

Summary

• In August, the broader monetary aggregate in pesos (M3) showed a growth of 1.8% and maintained its relatively stable year-on-year rate of change at around 21%. All its components registered increases in the month, highlighting the one corresponding to fixed-term placements.

• The liquidity of financial institutions in national currency (sum of cash in banks, the current account of the entities in the Central Bank, net passes with such entity and the holding of LEBAC and NOBAC) increased 0.6 p.p. in August and represented 37.8% of total deposits in pesos. The increase in the ratio was mainly explained by the increase in the proportion of passes with the Central Bank and the holdings of LEBAC and NOBAC.

• By means of communication “A” 5623, changes were established in the Minimum Cash regime, effective as of September. Two objectives were pursued: 1) to increase the incentives for the installation of ATMs in areas with less banking development, an increase in the deduction of reserve requirements for cash withdrawals from ATMs that are not for the exclusive use of the customers of each entity was ordered; and (2) in order to promote the service of payment of social security benefits, which generally involves greater cash withdrawals through bank branch windows, it was decided to implement a reduction in the requirement of reserve requirements based on the accreditations made by the National Social Security Administration for the payment of salaries and/or other social security benefits.

• In August, loans in pesos to the private sector showed a growth of 2% ($9,700 million), driven by commercial financing and consumption-oriented financing. In this way, they accelerated their monthly expansion rate and, in the last 12 months, accumulated an increase of 21.9%. In particular, personal loans showed greater dynamism than in previous months, with a growth of 2.2% ($2,270 million), which was the highest this year. Part of the boost came from the loans granted within the framework of Pro.Cre.Auto, through which the Banco de la Nación Argentina granted personal loans for around $750 million until August, with a total of approximately 7,400 operations. In turn, credit card financing increased 3.5% compared to the previous month, reaching a year-on-year growth of 34%.

• Interest rates paid by financial institutions for their fixed-term deposits continued to fall in August, although to a lesser extent than in previous months. In the wholesale segment, the BADLAR of private banks averaged 21.2%, down 0.8 p.p. in the month. In the retail segment, the monthly average of the interest rate paid by private entities for fixed-term deposits of up to $100,000 and up to 35 days stood at 18.9%, registering a monthly drop of 0.4 p.p.

• The interest rates applied to loans in pesos to the private sector had a heterogeneous behavior. On the one hand, interest rates on financing through documents decreased, while the interest rate applied to personal loans remained practically unchanged compared to July. On the other hand, those corresponding to shorter-term commercial lines registered an increase in their monthly average level, in line with what was observed in the interfinancial markets.