Money reserves and counterpart assets at QR74.6bn

Qatar Central Bank (QCB) data released on Thursday indicated that the total Money Reserve in the Qatari banking system decreased by the end of August by about QR5.7bn, but still 23.8 percent higher than in the third month of the blockade in August 2017, to reach by the end of August 2019 to the level of QR 74.6bn, compared to QR 80.3bn last July, and QR60.3bn in August 2017.

Reserve Money consists of four components: Issued Currency, Required Reserve, Excess Reserve, and Others. The Issued Currency is the total amount issued by QCB at some time in Qatari currencies, the Required Reserve is 4.50 percent of the total amount of the customer deposits with all commercial banks in Qatar. The Excess Reserve is the unused surplus with banks at any time, and banks voluntarily deposit it with QCB as a reserve in order to cover the clearing operations between them.

In details, we note that the decline in the Reserve Money has been attributed to the decline in the “other” category” – which represents bank deposits with QCB through the Qatari Monetary System (QMR) mechanism, and its balance decreased to QR 15 billion compared to about QR21.9bn in July, but still higher than a year ago when it reached QR11.4bn, and only QR1.47bn two years ago. This indicates a stable liquidity of the Qatari banking system.

The Required Reserve which accounted for half of the Reserve Money worth QR36.8bn, indicates a stable category, and it usually increases by the increase the of the customer deposits with commercial banks.

The Issued Currency remained stable, with a limited decline of QR0.4bn to the level of QR 16.5bn, after it had seen a noticeable increase in the month of the siege in June 2017 to the level of QR19.6bn.

The Excess Reserve deposited at the QCB rose in August from July by about QR1.8bn to the level of QR 6.28bn, and is still higher than its level in August 2017 of QR4.87bn, indicating improved liquidity management at banks operating in Qatar.

On the other hand, the Reserve Money referred to above is equal to Counterpart Assets and consists of Net Foreign Assets and Net Domestic Assets.

Net Foreign Assets were low in the first year of the blockade between June 2017 and August 2018 below the level of QR93.5bn, followed by steady increases thereafter, and reached the level of QR 140.5bn in August 2019, an increase of 50.3 percent in the last year; This indicates a significant improvement in the levels of net foreign assets, despite the pressure exerted by the blockade countries on those Reserves.

Net Domestic Assets are often negative. It was at the end of 2014 at a negative level of QR101.3bn, then negative QR85.6bn at the end of 2015, and turned to positive QR9.8bn by the end of the siege year in 2017, then returned to negative QR26.7bn at the end of 2018, and to negative QR65.9bn at the end of August 2019.

In total, net Foreign Assets with Net Domestic Assets fell to QR 74.6 billion, which is equivalent to Reserve Money, or what is known as the “Counterpart Assets”, or high-strength money.
(The views published in this column are those of the author and do not necessarily represent or reflect the views of The Peninsula)

Source from: The Peninsula