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Databank research has indicated that currency outside banks grew slightly better in the final quarter of last year, particularly in the month of November.
This means more notes and coins were in circulation among households and businesses during the last quarter of last year to stimulate spending and consequently economic growth.
It indicates that the increase in the money supply is also due to the December elections as political parties spend significantly on branded paraphernalia and advertising.
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The growth of currency in circulation hovered at 37% on the average from June to August last year but moved to 40% in the last quarter of the year.
This could have facilitated spending in various sectors of the economy and increased the total value of goods and services.
According to the research, this could suggest the economy is very liquid and has begun to recover from the last quarter of 2020.
Demand deposits, usually current accounts and call accounts witnessed their highest growth of 37% in December last year.
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Banks usually prioritise demand deposits because it comes virtually with no cost and therefore such growth adds to the profit margin of financial institutions
Meanwhile, savings and time deposits also witnessed good growth in the last four months of 2020.
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FrontPageGhana.com
