Monthly Monetary Report

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

Summary

• In September, the broadest monetary aggregate in pesos (M3) showed growth of 1.5%, maintaining its year-on-year expansion rate stable at around 21%. Among its components, private sector placements registered the largest increases. Time deposits in pesos in the private sector grew 1.2%, with a year-on-year increase of close to 28%.

• The liquidity of the financial institutions in the segment in national currency (sum of cash in banks, the current account of the entities in the Central Bank, the net passes with this institution and the holding of LEBAC and
NOBAC) increased in September to 39% in terms of deposits in pesos. In terms of composition, the 1.2 p.p. increase in the ratio was mainly explained by the increase in excess liquidity (passes with the
Central Bank and holdings of LEBAC and NOBAC).

• In September, loans in pesos to the private sector grew by 1.9% ($9,330 million), accumulating an increase of 20.5% in the last twelve months. The growth of those instrumented
through documents and personal loans was highlighted; the amount granted of the latter in September was the highest in recent years. Around $8,300 million were placed in the month, of which around $740 million corresponded to loans granted included in Pro.Cre.Auto. Thus, since its inception, within the framework of Pro.Cre.Auto, loans for around $1,600 million have been granted, having carried out
approximately 16,070 operations.

• In the middle of the month, the “AHORA 12” program was launched, through which entities offer the private sector financing in 12 interest-free installments for the purchase of goods and services, with the aim of stimulating domestic consumption. The Central Bank issued two regulations aimed at supporting the implementation of this program. On the one hand, it provided that financing to non-financial companies issuing credit cards at an interest rate of 0% can be assigned to complete part of the quota of the Credit Line for Productive Investment, to the extent that these companies have adhered to the “AHORA 12” program. On the other hand, through Communication “A” 5638, a deduction was established for the requirement of reserve requirements equivalent to 16% of the financing that financial institutions grant within the framework of the “AHORA 12” program and those aimed at non-financial companies that issue credit cards at an interest rate of 0%. to the extent that these companies have adhered to said program.

• The interest rates paid by financial institutions for their fixed-term deposits decreased. With regard to the wholesale segment, the BADLAR of private banks fell 0.9 p.p., averaging 20.3%. 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 18.4%, registering, as in August, a monthly fall of 0.5 p.p. This behavior was also observed in the interest rates applied to commercial loans in pesos (current account advances, -2 p.p.; and documents, both discounted, -0.3 p.p., and single-signature, -1.6 p.p.).

• In order to encourage savings in national currency, Communication “A” 5640 established a minimum interest rate on fixed-term deposits made by individuals as of October 8, provided that the total time deposits per individual in the entity do not exceed the amount of the deposit guarantee insurance coverage. Minimum interest rates are a proportion of the LEBAC cut-off interest rate
with a term closest to 90 days. In turn, in order to extend the protection of savers, the amount of deposit guarantee coverage per holder was increased from $120,000 to $350,000
(Communication “A” 5641).

• As of October 3, new levels began to apply to the interest rates of the Central Bank: those corresponding to passive passes went to 13% and 14%, for 1 and 7 days, respectively; while
those of active passes for the same terms rose to 16% and 17%.