Monthly Monetary Report

Executive summary

In August, transactional private M2 remained stable in real and seasonally adjusted (s.a.) terms, after three months of growth. Among its components, cash held by the public and transactional sight deposits performed differently: the former fell by 0.5% s.a. and the latter rose by 0.4% s.a., both in real terms.

The monetary base increased by 1.5% s.a. at constant prices, after eleven consecutive months of contraction, keeping its share at around 4% of GDP. The August increase was explained by the higher minimum cash requirement, given the growth of sight deposits in July. Although peso-denominated loans to the private sector fell by 1% s.a. in real terms, the performance across credit lines was heterogeneous. Mortgage-backed loans continued growing. This credit line will receive additional support from the Time Deposit Auction Program (Programa de Licitación de Plazos Fijos) funded by the Sustainability Guarantee Fund (Fondo de Garantía de Sustentabilidad, FGS). This program will place up to ARS2 trillion in UVA-denominated time deposits with financial institutions, which must be allocated to first-home loans for natural persons.

In turn, loans denominated in foreign currency to the private sector grew by USD258 million in August and ended the month with a stock of USD25.24 billion, driven by unsecured promissory notes. It is worth noting that the BCRA adjusted the prudential framework for granting loans in foreign currency. The regulation expands the eligible uses for deposits in foreign currency in order to increase the financing available for private investment, while preserving the stability of the financial system.