Continued Growth: How Much Currency is in Circulation in Indonesia?

Economic liquidity or broad money supply (M2) saw renewed positive growth in February 2022. According to Bank Indonesia (BI) records, the money supply stood at Rp7,672.4 trillion last month, a 12.5% year-on-year (yoy) increase.

BI noted that this figure is lower than the 12.8% (yoy) growth recorded in January 2022. The slowdown in M2 is mainly attributed to the slowing quasi money.

Quasi money was recorded at Rp3,374.5 trillion in February 2022. This figure grew by 5.9% (yoy), lower than the previous month's growth of 7.8% (yoy).

Meanwhile, narrow money (M1) amounted to Rp4,274.4 trillion in February 2022, growing by 18.3% (yoy). This growth is higher than the previous month's 17.1% (yoy) growth.

BI stated that M2 growth is influenced by three factors: accelerated credit disbursement, expansion of central government finances, and net foreign assets.

In February 2022, credit disbursement grew by 5.9% (yoy), higher than the previous month's growth of 5.4% (yoy).

On the other hand, government financial expansion slowed down in line with the slowing growth of net monetary claims on the central government, from 48.1% (yoy) in January 2022 to 42.7% (yoy) last month.

Similarly, net foreign assets in February 2022 grew by 1.4% (yoy), slowing down compared to January 2022's 1.8% (yoy).

(See also: Foreign Exchange Reserves Rise to US$141.4 Billion in February 2022, Driven by Taxes and Debt)