December 21, 2020
For the week leading up to the Christmas holidays (14 to 18 December 2020), Bank of Jamaica (BOJ) net issued currency amounting to $5.7 billion, representing an increase of 3.3 per cent in the currency stock for the week. This was below the $8.1 billion or 6.2 per cent increase in the stock for the similar period in 2019.
The net currency issue for the review week translated to an increase of $11.8 billion (7.0 per cent) in the currency stock for the month-to- 18 December 2020. The increase was below the Bank’s projection for an expansion of 8.0 per cent for the period, but slightly above the net currency issue of 6.6 per cent for the corresponding period in 2019.
As at 18 December 2020, the stock of currency was $180.7 billion, representing an annual nominal growth of 30.4 per cent, relative to 13.9 per cent at the corresponding period in 2019. When the forecasted change in the general level of consumer prices is considered, the estimated real growth in currency for the period is 23.7 per cent, which is above the real growth of 7.2 per cent for the same period of the previous year.
On 14 December 2020, the BOJ issued a press release indicating that the currency stock is projected to increase in December 2020, relative to the stock at end-November 2020, by $22.0 billion (13.0 per cent) to $190.9 billion. There is some uncertainty surrounding this forecast particularly due to the COVID-19 pandemic.
Background
Typically, Bank of Jamaica (BOJ) issues and redeems notes and coins daily in order to meet the demand for cash from individuals and businesses.1 There is normally a stronger demand for currency during the month of December, associated with increased spending over the holiday period. Financial institutions therefore request more currency from BOJ to satisfy this demand.
Glossary:
· Currency Issue: refers to Jamaican notes and coins in the hands of the public (currency in circulation) in addition to notes and coins held by financial institutions in their vaults (vault cash). Bank of Jamaica redeems (buys) or issues (sells) notes and coins to financial institutions when institutions have a demand for cash. The difference between currency issued and that which is redeemed during a period of time is referred to as net currency issue.
· Currency Stock or Currency in Circulation: (see Currency Issue)
· Real Currency Growth: reflects the percentage change in the real stock of currency which is calculated as the nominal currency stock divided by the consumer price index (CPI) at a given point in time.
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