Monthly Monetary Report

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

Summary

• Since mid-2013, monetary aggregates have maintained a stable year-on-year growth rate. In October, the broadest monetary aggregate in pesos (M3) showed a year-on-year growth of 29.6%, presenting a monthly increase of 1.9%. For its part, the broader private monetary aggregate (private M3) exhibited a variation of 31.5% in the last 12 months, with a monthly increase identical to that recorded by the total M3 (1.9% in October). The monthly increase in the broader aggregates was explained, during the month of October, by the dynamics of credit to the private sector and by public sector operations. Considering the first ten months of 2013, and as a result of the active public policies aimed at promoting productive credit, loans in pesos to the private sector were the main driving factor of private M3.

• Among the components of private M3, the performance of fixed-term placements stands out, which continued to maintain a high year-on-year rate of expansion, which is currently close to 40%. In October, time deposits increased 2.3% and, in this way, continued to gain share within the private M3, reaching a weight of 31.1%; 4.3 p.p. above the proportion they represented 2 years ago. Distinguishing by amount stratum, in the month both deposits of less than $1 million (2.4%) and placements belonging to the wholesale segment (2.2%) increased.

• Bank liquidity (measured as the sum of cash in banks, the current account of the entities in the Central Bank, the net passes with such entity and the holding of LEBAC and NOBAC, as a percentage of total deposits in pesos) stood at 31.8%. Compared to September, there is a reduction in the proportion of net passes with the Central Bank, partially offset by the increase in holdings of LEBAC and NOBAC in terms of deposits. Meanwhile, the most liquid assets (cash in banks and current account in the Central Bank) remained stable in terms of deposits.

• During the month of October, loans in pesos to the private sector exhibited a monthly increase of 2.7% ($11,540 million), in line with the levels of growth that have been shown since May. The main contributions to the month’s growth were made by financing instrumented through documents and by personal loans, which contributed 1 p.p. and 0.8 p.p., respectively.

• Within the framework of the policies to stimulate productive credit developed by the BCRA, the funds awarded through the tenders of the Bicentennial Productive Financing Program (PFPB) continued to be disbursed. Thus, the total funds disbursed since the beginning of the PFPB amounts to $5,745 million, which represents about 75% of the total amount awarded.

• In addition, with the completion of the third stage of the “Credit Line for Productive Investment” by the end of the year, loans for almost $55,000 million will have been granted through this modality. These initiatives allowed loans to SMEs to gain share of total loans to companies. In fact, the dynamism that financing to SMEs has been showing allowed them to reach a share of close to 31% of loans to legal entities, exceeding by 8 p.p. the values at the end of 2009. It is noteworthy that 6 p.p. of this increase has taken place since the implementation of the “Credit Line for Productive Investment” in mid-2012.

• With regard to passive interest rates, the interest rate paid by private banks for their fixed-term deposits in pesos up to $100,000 and up to 35 days of term averaged 15.7%, while the BADLAR of private banks – interest rate for deposits of $1 million and more, with a term of 30-35 days – registered a monthly average of 18.7%. On the other hand, among the active interest rates, the one charged for advances granted to companies, for more than $10 million and up to 7 days of term, also averaged October at 18.7%.