Belarusians Withdraw $3,7 Billion Of Foreign Currency Deposits From Banks

Withdrawal of money from the system has been going on for many months in a row.

The statistics on household and business deposits are part of the broad money data. The dynamics of the money supply is published in two sections - on the 1st day of the month and on average for the reporting period, the website banki24.by writes.

The data on the money supply at the reporting date is subject to calendar distortions — especially when the month-to-month period falls on a weekend. Therefore, further we will use the data on average for the period.

In the main directions of monetary policy for the current year, it is written that broad money supply in December 2021 will grow by no more than 7-10%. At the same time, officials wanted to limit inflation at 5%.

In fact, inflation for 6 months amounted to 5.8%, which is already higher than the annual target. Theoretically, it is possible to keep it within the framework of the forecast document only in case of a decrease in prices in the remaining six months.

However, it is clear that in reality this is almost unbelievable. Even in years with historically low inflation in Belarus, there was no deflation period longer than 2 months in a row.

But the plans to keep the money supply within the framework are "overfulfilled". At the end of June, the total amount of money fell by 2.2% versus the comparable month of 2020. This was due to a combination of conditions.

First, the National Bank at the end of August 2020 limited the constantly available liquidity provision operations. Secondly, the currency part of the money supply is shrinking due to the outflow of deposits from banks.

According to the Belarusian method, deposits are divided into transferable and others. Transferable deposits are mainly card accounts of individuals and settlement accounts of organizations. But other deposits - this is what ordinary Belarusians understand by deposits in banks. This is money that depositors leave in the system for a certain period, and not on demand (like transferable deposits).

In the 2010s, the Belarusian ruble has repeatedly gone through major devaluations. Against this background, Belarusians have low confidence in the ruble as a means of savings. On average, in June 2021, the share of ruble deposits (other deposits) in Belarusian rubles was only 30.7%.

In June 2021, transferable foreign currency deposits of individuals in Belarus amounted to USD 1.280 billion in equivalent. This is partly the balances from withdrawn deposits, partly the result of non-cash purchases of foreign currency. Transferable deposits of the population in rubles amounted to BYN 3.077 billion.

Other deposits of individuals in rubles (ruble deposits in the popular understanding) amounted to BYN 4.600 billion in June. For two consecutive months, the balances of these deposits have been declining. Apparently, the reasons for the fall lie in the incident with the landing of the Ryanair flight (May) and the ensuing EU sanctions (June).

Foreign currency deposits (other deposits) in June-2021 decreased to USD 4.123 billion. Since October 2015 (local maximum), the amount of individuals' foreign currency deposits in the system has decreased by USD 3.706 billion. In relative terms, this is almost half of the former savings of citizens in banks - 47.3%.

The withdrawal of foreign currency deposits by individuals has been going on in the continuous regime for 17 months in a row - since February 2020. During this time, the Belarusians have withdrawn USD 2.087 billion in equivalent from banks.