Panic withdrawals reduce bank deposits

Panic withdrawals reduce bank deposits
Published: 24 January 2014
According to the RBZ November Monthly economic review broad money recorded an annual decline of 0.46% in November 2013, compared to a growth of 3.16% recorded in October 2013.

On a month-on-month basis, broad money declined by $144.6 million (3.66%) to $3 807.1 million in November, from $3 951.7 million in October 2013.

"The decline was largely on the back of panic withdrawals experienced by the banking sector during the month under review," said the RBZ.

Also explaining the reduction in monetary stock, were subdued economic activity and persistent liquidity shortages which prevailed during the period of analysis.

If these prevailing factors continue then the country may face perpetual reductions in monetary stocks unless business activity is boosted or a significant level of liquidity is injected in the economy.

The month on month decline was due to contractions of $140.5 million in demand deposits and $24.8 million in under 30-day deposits. Partially offsetting the declines were increases of $15.2 million and $5.5 million in savings and over 30-day deposits, respectively.

Fig 1 derived from the review illustrates the distribution of the deposits in the month of November.

- bh24
Tags: Banks, RBZ,


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