At end-November, broad money (M2) amounted to lei 164,560 billion, up 0.3 percent month on month in nominal terms, but down 2.4 percent in real terms. The rise in net domestic assets was solely accountable for the increase in broad money.
Net domestic assets moved higher by 1.1 percent to lei 81,377 billion given that domestic credit fell by 7.6 percent to lei 98,603 billion and other net assets reduced their negative balance by lei 8,918 billion. Behind these developments stood mainly the decline in overdue loans by 74.1 percent or lei 5,156.1 billion, following the use of specific provisions for credit risk and the recording of such loans as off-balance-sheet items, in accordance with the provisions of Regulation No. 2/7 April 2000 on classification of loans and investments and on the making, adjustment and use of specific risk provisions.
The 4.7 percent fall in non-government credit, which reached lei 70,783 billion, stemmed from the decline in both credit in lei and credit in foreign exchange, by 2.6 percent and 8.1 percent, respectively (the latter, expressed in lei, dropped by 6.2 percent). Credit to government, net, went down by 14.1 percent to lei 27,820 billion due mainly to the issuance of Eurobonds worth Euro 150 million1) and to the increase in the balance of the General Account of Treasury.
Net foreign assets inched down by 0.4 percent to lei 83,183 billion following the 0.5 percent fall in the 'Foreign Exchange' component and the insignificant rise in the "Gold" component.
Narrow money (M1) rose by 3.9 percent to lei 37.024 billion, as a result of the 1.3 percent increase in currency in circulation to lei 22,808 billion and of the 8.2 percent spike in demand deposits to lei 14,216 billion. The rise in currency in circulation was attributed mainly to several incidental factors, such as: (i) the doubling of the child benefit; (ii) cash payments made by the Bank Deposit Guarantee Fund (through Banca Română de Dezvoltare - Société Générale) for the compensation of depositors with Banca Internaţională a Religiilor.
Quasi-money edged 0.7 percent lower to lei 127,536 billion. Household savings declined by 0.7 percent to lei 40,827 billion (their share in broad money moving down from 25.0 percent to 24.8 percent), as households maintained their preference for Treasury certificates in lei, which rose by 4.8 percent to lei 8,093 billion. Household forex deposits, expressed in US dollars, fell by 2.6 percent, while the volume of foreign-exchange Treasury certificates outstanding with individuals remained virtually unchanged (to the equivalent of USD 117.2 million).
Time and restricted deposits in lei of economic agents went up by 1.6 percent to lei 16,345 billion. Residents' forex deposits, expressed in lei, decreased by 1.2 percent to lei 70,364 billion due mainly to the reduction in the deposits of state-owned and privately-owned enterprises and to households' withdrawals.
At end-November, the non-bank sector held government securities in lei worth lei 13,118 billion, down 5.7 percent month-on month. Government securities in foreign exchange held by the non-bank sector stood at the equivalent of USD 151 million, 3.3 percent higher over end-October.
1) The foreign borrowing is recorded as a foreign exchange deposit of the Ministry of Finance with the National Bank of Romania, thereby decreasing the government`s debtor position to the banking system.