During the last ten work days of December 2023 (18 to 29 December), Bank of Jamaica (BOJ) issued currency of $24.9 billion, which was $19.3 billion more than the $5.6 billion it redeemed from the financial system during that time. This net currency issue of $19.3 billion for the period contributed to an overall growth of $23.7 billion or 9.3 per cent in the currency stock for December 2023 relative to the previous month. The rate of growth in currency issue for the month was lower than the Bank’s projection for growth of $29.7 billion or 11.7 per cent and also lower than the 13.4 per cent growth recorded for December 2022.
Figure 1
At 31 December 2023, the stock of currency was $277.4 billion (see Figure 1 above), representing an annual increase of 18.7 per cent, compared to an annual growth of 3.0 per cent at end-December 2022. The higher annual growth rate is consistent with an increase in vault cash amid a slow return of old currency notes to Bank of Jamaica. When the estimated change in consumer prices is considered, the currency stock in real terms is estimated to have increased by 11.1 per cent over the period, compared to the real decline of 5.8 per cent for the corresponding period in 2022.
The Bank anticipates that the majority of the currency issued during December 2023 will be redeemed during January 2024. For the last five years, net currency redemption in January averaged 67.7 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 the institutions have a demand for cash. The difference between currency issued and currency 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.
