Money Supply Increased to Rp 7,867.1 Trillion in December 2021: Here's Why

Bank Indonesia (BI) reported that broad money supply (M2) in December 2021 increased to Rp 7,867.1 trillion, growing by 13.9% year-on-year (yoy). This growth is higher than the previous month's 11% (yoy) growth.

The central bank noted that this increase was driven by the acceleration of narrow money (M1) and quasi money. Specifically, M1 amounted to Rp 4,413.9 trillion, growing by 17.9% (yoy), higher than the previous month's 14.7% (yoy) growth.

Meanwhile, quasi money in December 2021 reached Rp 3,430.5 trillion, growing by 9.3% (yoy), higher than the previous month's 7% (yoy) growth. On the other hand, securities other than shares still showed negative growth of -2.3% (yoy), although less deep than the previous month's -16.3% (yoy) negative growth.

Furthermore, the growth of M2 in December 2021 was influenced by government financial expansion and credit disbursement. Government financial expansion is reflected in the net claims on the central government, which grew by 37.7% (yoy), an increase compared to the 30.4% growth in November 2021.

Credit disbursement also grew by 4.9% (yoy), an increase compared to the previous month's 4.4% (yoy) growth.

Net foreign assets acted as a constraint on higher M2 growth. In December 2021, net foreign assets grew by 5.8% (yoy), slowing down compared to November 2021's 10.6% (yoy) growth.