During the last ten work days of December 2021 (20 to 31 December), Bank of Jamaica recorded net currency issue of $12.0 billion to financial institutions (commercial banks, building societies and cambios). The issue for the period contributed to an overall growth of $22.5 billion or 11.0 per cent in the currency stock for December 2021 relative to the previous month. This was broadly in line with the Bank’s projection for growth of $23.1 billion or 11.3 per cent. The rate of growth in currency issue for the month was lower than the 12.8 percent growth for December 2020.
Figure 1
At 31 December 2021, the stock of currency was $226.9 billion (see Figure 1above), representing an annual increase of 19.1 per cent, relative to an annual growth of 28.0 per cent at end-December 2020. When the estimated change in consumer prices is considered, the estimated real annual growth in currency for the period was 10.9 per cent, compared to 21.6 per cent for the corresponding period in 2020. This deceleration reflects a moderation in orders relative to 2020 when there was considerable uncertainty about the effect of the pandemic.
The Bank anticipates that the majority of the currency issued during December 2021 will be redeemed during January 2022. For the last five years, net currency redemption in January averaged 75.8 per cent of the net currency issued in the preceding month.
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. 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.
