T

he amount of money in circulation by the end of this year is predicted to grow more slowly compared to the same period last year as the country experiences sluggish economic growth, according to Bank Indonesia (BI).

BI head of money management operations Luctor E. Tapiheru said the central bank projected that the total currency in circulation, locally known as UYD, would reach Rp 581.3 trillion (US$42.53 billion) nationwide by the end of this year.

The projection was a 10 percent increase from the Rp 528.5 trillion at the end of last year, but was still lower than the average annual growth of above 15 percent, he said.

As of now, the total currency in circulation stands at Rp 526 trillion, BI'€™s data shows.

'€œThe lower growth may have been caused by a slower economy, but it was also possibly due to the late disbursement of government spending. On average, there is not a significant spike every year,'€ Luctor said recently.

BI'€™s latest assessment showed that liquidity in the country'€™s economy, or broad money (M2) circulation nationwide, grew slower at 10.4 percent year-on-year (yoy) in October, from 12.7 percent yoy a month earlier, due to sluggish growth in narrow money (M1) and quasi-money.

Narrow money and quasi-money decreased respectively to 10.2 percent yoy and 10.6 percent yoy in October, from 12 percent yoy and 12.5 percent yoy in September.

Narrow money is currency outside banks and rupiah demand deposits, while quasi-money means rupiah and foreign currency-based term deposits and savings as well as foreign currency demand deposits.

Growth in Southeast Asia'€™s largest economy stood at 4.73 percent from July to September, lower than the 4.92 percent yoy growth recorded in the third quarter of 2014.

Despite lower growth of the overall currency in circulation, Luctor said that BI had also projected that the total outflow, or demand for cash, during the Christmas and New Year holidays was expected to increase by 10.7 percent to Rp 80.7 trillion, from 72.9 trillion in the same period last year.

'€œAs of now, cash withdrawals by all banks from the total Rp 80.7 trillion reached 50 percent, dominated by regions in Java and Jakarta,'€ he said.

Luctor said the central bank had prepared all of its offices across the country to ensure adequate cash supply during the surge of demand from banks, but would close down cash transactions on the public holidays of Dec. 24 and 25 as well as Dec. 31 and Jan. 1.

'€œWe will operate as per usual on Jan. 4, 2016, and banks usually follow suit. However, we have requested banks to ensure that there is enough cash available at their ATMs during the public holidays,'€ he said.

Large banks have said that the cash supply at ATMs and branches would be sufficient to support the surge in demand approaching the end of year.

State-owned lenders Bank Negara Indonesia (BNI) and Bank Mandiri projected that additional cash demand would reach more than Rp 28 trillion and Rp 17.5 trillion by the end of this year, respectively, an increase of 17 percent and 15.7 percent yoy.

BI also announced that it would operate its limited clearing system, Real Time Gross Settlement (BI-RTGS) and Scriptless Securities Settlement System (BI-SSSS) only on Dec. 24, 25 and 3.

The systems will be fully operational again on Jan. 4, 2016.
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