Japan’s key money supply gauge rose 3.8 percent in March from a year earlier, while the balance of quasi-money — most of it time deposits — saw a record drop ahead of the April 1 abolition of the government’s full-refund guarantee on time deposits, the Bank of Japan said Wednesday.
Quasi-money is money in time deposits and other types of savings that cannot be immediately cashed in, including foreign-currency deposits and nonresidents’ yen deposits.
The average daily balance of M2 — cash in circulation, demand deposits and quasi-money — plus certificates of deposit came to 663.6 trillion yen, compared with a revised 659.1 trillion yen in February, the BOJ said.
The balance of quasi-money dropped by a record 8.6 percent to 342.2 trillion yen following the previous record fall of 6.4 percent in February.
The balance of time deposits has been steadily falling, in step with a surge in the balance of demand deposits, due to a massive shift of money to demand-deposit accounts from time-deposit accounts.
On April 1, the government imposed a 10 million yen limit per depositor per bank on the sum of time deposits it is authorized to refund if a bank goes under. The same ceiling will be placed over ordinary deposits next April.
The record drop in the March balance of quasi-money brought the scope of the year-on-year drop in the quasi-money balance for the whole of fiscal 2001 to a record 4.2 percent.
Meanwhile, the March balance of M1 — cash in circulation plus money in demand-deposit and checking accounts — rose 24.4 percent to 298.7 trillion yen, the biggest increase since September 1973.
The March pace of growth was even speedier than the revised 19.2 percent increase in the previous month.
The balance of demand deposits and money in checking accounts shot up 28.1 percent from a year earlier to 235.8 trillion yen.
As a result, the M1 balance for the whole of fiscal 2001 rose 12.3 percent, the biggest increase since fiscal 1976.
Meanwhile, the pace of growth in the key money supply gauge — M2 plus CDs — for February was revised to 3.6 percent from the originally reported 3.7 percent.
The balance of M2 plus CDs held principally by corporations, individuals and local governments is a key money supply gauge and is considered to have a close correlation to changes in economic activity.
The 3.8 percent growth in the balance of M2 plus CDs was the highest since July 1999. The balance has been boosted by the central bank’s quantitative monetary easing policy.
Cash in circulation in March rose 12.4 percent to 62.9 trillion yen, compared with a revised 10.5 percent gain in February.
The balance of CDs declined 9 percent to 22.7 trillion yen, a turnaround from the previous month’s revised increase of 11.3 percent.
Broadly defined liquidity, the widest measure of money supply, rose 1.3 percent to 1.31 quadrillion yen in March following a revised increase of 1.6 percent in February.
But the same gauge rose only 1.9 percent in fiscal 2001, the slowest pace of growth on record.
The gauge includes postal savings, deposits at agricultural and fishery credit cooperatives, loan trusts and money trusts, bank debentures, and Japanese and foreign government bonds, as well as the M2 balance plus CDs.
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