June 2020 Economic and Financial Review

June 2020 Economic and Financial Review DOMESTIC EONOMIC DEVELOPMENTS

$175.2m, reflecting higher inflows in all

currency in use and bank deposits, amid

countries, except Saint Lucia.

significant job losses and uncertainty.

Declines were registered in foreign currency

deposits (19.8 per cent) and currency in

Banking Sector Developments

circulation (7.5 per cent) contributed to the

As the crisis began to take effect in ECCU

downward trend in narrow money.

member countries, the ECCB responded

with unprecedented actions to support

The net foreign assets of the ECCU’s

economic and financial stabilization.

banking system rose by 9.9 per cent to

These included the expansion of credit

$10,092.8m, primarily attributed to the

extended to governments, lowering the

combined effects of an 11.7 per cent decline

discount rate to 2.0 per cent from

in liabilities and 3.8 per cent growth in

6.5 per cent and in concert with the

claims on non-residents. The latter was

Bankers’ Association, agreeing to a range

supported by a 13.3 per cent increase in

of banking sector measures to support

ECCB’s imputed reserves.

customers. 1

Domestic claims 2 (credit) declined at a pace

ECCU Monetary Survey Percentage Change

of 3.8 per cent to $9,877.7m, reflecting

(M2) %

(NFA)%

declines of 47.4 per cent and 26.6 per cent

10.0

10.0

in claims on state-owned enterprises and

8.0

5.0

6.0

non-bank financial institutions, respectively.

4.0

0.0

2.0

Concurrently, net claims on central

0.0

-5.0

-2.0

governments rose, influenced by an 18.5 per

-10.0

-4.0

19 Q1

19 Q2

19 Q3

19 Q4

20 Q1

20 Q2

cent increase in liabilities, while household

Money Supply (M2)

Net Foreign Assets

and business credit grew at a measured pace

of 1.8 per cent and 1.2 per cent,

Broad money supply (M2) plunged by

respectively.

10.4 per cent to $16,279.8m during the first

half of 2020, reflecting contractions in

1 The programme included a loan repayment moratorium for an initial period of six months; waiver of late fees and charges and targeted supervisory flexibility

2 Due to a change in methodology in compiling the monetary, the nomenclature changed to ‘claims’ from ‘credit’

10