Monthly Monetary Report

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

Summary

• The average monthly balance of private M3 remained relatively stable in February, as a result of a fall in means of payment offset by the increase in fixed-term placements. The latter type of deposit exhibited one of the largest monthly increases in the last 12 months (3.9%), surpassing the increase in February 2013. Thus, private sector term placements increased their year-on-year rate of change to 32.7%, 1.7 p.p. above the previous month.

• As expected in February, loans in pesos to the private sector moderated their monthly rate of expansion, influenced by seasonal factors linked to the summer recess. The growth recorded in the month was 1.3% ($6,230 million) and was mainly explained by the increase in current account advances and credit card financing. Thus, the balance of loans to the private sector in pesos accumulated a growth of 34.1% in the last 12 months.

• As part of the policies to stimulate credit to the productive sector, the Central Bank continued to make disbursements of the funds awarded through the Bicentennial Productive Financing Program (PFPB). In February, the delivery of $81.6 million was made, bringing the total disbursed since the beginning of the PFPB to $6,093 million, about 80% of the total awarded. On the other hand, and with respect to the “Credit Line for Productive Investment” (LCIP), at the end of February the Central Bank ordered that during March up to 10% of the quota of the first half of 2014 may be applied to the discount of deferred payment checks for MSMEs, and up to an additional 10% during April 2014. with the aim of maintaining a fluid financing of working capital of smaller companies and with greater job creation in relative terms.

• At the beginning of February, the Central Bank, through communication “A” 5536, decided to reinstate the limit on the positive Net Global Foreign Currency Position (GNP) of financial institutions to the values in force until April 2005. It was provided that the positive PGN may not exceed 30% of the Computable Patrimonial Liability (RPC) or liquid own resources, whichever is less. Additionally, it was established that the positive forward foreign currency PGN may not exceed 10% of the PRC. As a result of this measure, the supply of foreign currency and other assets denominated in foreign currency increased, since the entities had to dismantle asset positions in that denomination.

• The sales of dollars by financial institutions by virtue of the aforementioned regulatory modification generated an increase in their liquidity in local currency. Thus, the liquidity in pesos of financial institutions (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 1.6 p.p. compared to January, standing at 32.5% of deposits in pesos. The main increase was verified in surplus liquidity: net passes with the Central Bank and holding of LEBAC and NOBAC.