Jakarta: Broad money (M2), as a measure of liquidity in the economy, experienced faster growth in December 2020 on the back of narrow money (M1), Bank Indonesia (BI) has said.
Totalling Rp6,900.0 trillion, M2 growth accelerated to 12.4% (yoy) from 12.2% (yoy) the month earlier, driven by an uptick in M1 growth to 18.5% (yoy) from 15.8% (yoy) in the reporting period in line with increases recorded in terms of currency in circulation and rupiah demand deposits.
In contrast, quasi-money growth moderated from 11.1% (yoy) in November 2020 to 10.5% (yoy) in December 2020 and the ongoing contraction affecting securities other than shares deepened from -5.8% (yoy) in November 2020 to -10.6% (yoy) in the reporting period.
Based on the affecting factors, Net Foreign Assets (NFA) and fiscal expansion by the Government were the key drivers of M2 growth in December 2020.
"This was reflected by an increase in NFA growth to 13.6% (yoy) from 10.3% (yoy) in November 2020," BI Communication Department Head Erwin Haryono in a press release on Friday.
In addition, net claims on the central government also increased, from 66.5% (yoy) to 66.9% (yoy) in December 2020, while outstanding loans disbursed by the banking industry recorded a deeper -2.7% (yoy) contraction after declining -1.7% (yoy) in November 2020.
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