BOJ projects currency in circulation to jump by J$21.5 billion

Durrant Pate/Contributor

There is more money in circulation in Jamaica for shoppers to spend during the holiday season.

The Bank of Jamaica (BOJ) is reporting that, for December 2022, it is projecting that the value of currency in circulation will increase by approximately $21.5 billion (10.4 per cent), relative to the stock at end-November 2022 ($206.1 billion) (see Figure 1).  

The forecast for the month is below the five-year average growth rate of 15.2 per cent for the month of December. There is normally a stronger demand for currency during the month of December, associated with increased spending over the holiday period.

Financial institutions therefore request more currency from BOJ to satisfy this demand.

Figure 1

The projected currency stock of $227.6 billion at end-December 2022 represents an annual nominal growth of 0.3 per cent compared to 19.1 per cent for 2021. This lower growth reflects a moderation in cash orders for December 2022 relative to the orders for the same period in 2021.

However, the latter period reflecting high demand for precautionary cash in the context of the COVID-19 pandemic as well as strong growth in remittances. The BOJ reports that the deceleration has also occurred in the context of a trend increase in the use of electronic means of payments.

When the forecasted change in the general level of consumer prices is considered, the currency stock in real terms is projected to decline by 9.4 per cent, which compares to the real growth of 11.0 per cent for the previous year.

The BOJ recorded net currency issue of J$5.3 billion (2.6 per cent) for the period December 1 to December 9, 2022.  This compares with a net currency issue of J$4.6 billion recorded over the same period in 2021.

Consequently, as at December 9, 2022, the stock of currency in the hands of the public and in the vaults of financial institutions was J$211.4 billion (see Figure 2).

Figure 2