At the end of 2021, the M3 money supply (cash in circulation, deposits up to 2 years, repurchases and debt securities with a maturity of up to 2 years) amounted to 1,985 billion PLN and by 8.9 percent.This is 162 billion PLN – Followed by NBP data. These dynamics are comparable to those observed in the years before the pandemic, when supply was only growing between 9 and 10 percent. annually.
At the time, it was related to economic growth, and over the past two years we can only talk about breaking through the economic downturn of 2020.
According to the average forecast recently compiled by the Polish National Bank, GDP will grow by 5.3% in real terms in 2021, that is, in nominal terms, taking into account the average annual inflation, it will be about 10.7%. Together with the nominal increase in 2020 of 1.5 per cent. (real decrease of 2.5%) gives approx 12.3% nominal GDP growth in 2020-2021. In that time, the M3 money supply increased by as much as 26.8 percent. From PLN 1,566 to PLN 1,985 billion.
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The difference – about 12.3 percent. Nominal GDP growth versus 26.8%. An increase in the money supply – that means Money arrives faster than can be explained by the growth of the economy. This is one of the causes of inflation. There is a lot of unpaid money in circulation. Inflation in December of last year let’s remember that it was already 8.6 per cent. yIt reached an annual average of 5.1 percent. In the two-year period, from December to December, prices increased by 11.2%.
Over a trillion zlotys in family accounts
The most important factor in increasing the money supply was the increase in household money. We kept current accounts with an increase of PLN 111 billion compared to the previous year (+14% per annum), or 898 billion PLN. After calculating these funds with term deposits up to two years, which decreased by 42 billion PLN during the year, there was a total of PLN 1,046 billion of these funds. The total increase in money held by households in banks amounted to PLN 69 billion during the year.
They have approximately PLN 39 billion (in checking accounts and deposits) in banks Non-financial companies. There was also Increase in circulation. During the year, its amount increased by 10.9%, that is, by 33.6 billion PLN.
At the end of December, there were up to 340.4 billion PLN in cash in circulationIt is a historical record. Although it should already be added that historical records are regularly broken month after month. But at a different pace. In December alone, cash in circulation increased by PLN 0.5 billion, compared to PLN 3.8 billion in November.
It is hard to beat the rate of supply growth in 2020, when the printing of money for anti-crisis shield needs was increased on a scale unprecedented in recent history. Then the M3 money supply increased by as much as 257 billion PLN, i.e. by 16%. On an annual basis, cash in circulation increased by 83 billion PLN, or 37 percent. xy. All this happened at a time when GDP was declining.
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