{"id":58854,"date":"2024-01-03T12:21:38","date_gmt":"2024-01-03T09:21:38","guid":{"rendered":"https:\/\/api.pozirk.online\/?post_type=longreads&#038;p=58854"},"modified":"2026-03-09T20:10:49","modified_gmt":"2026-03-09T20:10:49","slug":"more-money-does-not-make-belarusians-richer","status":"publish","type":"longreads","link":"https:\/\/pozirk.online\/en\/longreads\/58854\/","title":{"rendered":"More money does not make Belarusians richer"},"content":{"rendered":"\n<p><em>By<\/em> <em>Ale\u015b Hudzija<\/em><\/p>\n\n\n\n<p><strong>Belarus\u2019 money supply rose by nearly 20 percent in 2023, the central bank said last month. However, businesses and households have not become richer.<\/strong><\/p>\n\n\n\n<figure class=\"block-image block-image-normal\">\n\n    <img decoding=\"async\" width=\"1440\" height=\"720\" src=\"https:\/\/pozirk.online\/wp-content\/uploads\/2023\/12\/money_1440_banner_pixabay.com_kschneider2991_001.jpg\" class=\"attachment-full size-full\" alt=\"\" srcset=\"https:\/\/pozirk.online\/wp-content\/uploads\/2023\/12\/money_1440_banner_pixabay.com_kschneider2991_001.jpg 1440w, https:\/\/pozirk.online\/wp-content\/uploads\/2023\/12\/money_1440_banner_pixabay.com_kschneider2991_001-300x150.jpg 300w, https:\/\/pozirk.online\/wp-content\/uploads\/2023\/12\/money_1440_banner_pixabay.com_kschneider2991_001-1024x512.jpg 1024w, https:\/\/pozirk.online\/wp-content\/uploads\/2023\/12\/money_1440_banner_pixabay.com_kschneider2991_001-768x384.jpg 768w\" sizes=\"(max-width: 1440px) 100vw, 1440px\" \/>\n    <figcaption>\n        \n                    <div class=\"block-image__author\">\n                                <span>(pixabay.com)<\/span>\n            <\/div>\n            <\/figcaption>\n<\/figure>\n\n\n\n<p>The monetary system can be compared to the circulatory system of a living organism. Just as the circulatory system carries nutrients and essential elements throughout the body, the monetary system facilitates the flow of funds throughout the economy, saturating it with vital resources.<\/p>\n\n\n\n<p>Blood is distributed to parts of the body according to their needs. Similarly, money helps allocate resources to different sectors of the economy through transactions and market mechanisms, facilitating trade, investment and economic growth.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Money supply breakdown<\/strong><\/h2>\n\n\n\n<p>In this context, the National Bank of Belarus (NBB) applies an international methodology, reporting the four key measurements, such as M0, M1, M2 and M3.<\/p>\n\n\n\n<p><strong>M3 is time and demand deposits in foreign currency<\/strong><\/p>\n\n\n\n<p><strong>M2 is time deposits in rubels<\/strong><\/p>\n\n\n\n<p><strong>M1 is demand deposits in rubels (settlement accounts)<\/strong><\/p>\n\n\n\n<p><strong>M0 is currency in circulation<\/strong><\/p>\n\n\n\n<p>M0 represents the amount of cash in circulation, and is the most liquid component of the money supply. M1 is M0 and cash held in the current accounts of businesses and individuals. M2 is M1 and time deposits of individuals and legal entities in Belarusian rubels. M3 represents the rubel supply and all foreign currency deposits.<\/p>\n\n\n\n<p>The monetary system also includes securities and precious metal deposits, but this article focuses only on the key components. The NBB does not include foreign bills held by individuals in the broad money supply.<\/p>\n\n\n\n<p>The broad money supply (M3) in Belarus was as follows in December: cash in Belarusian rubels (13 percent), cash in current bank accounts (18 percent), rubel deposits (21 percent), foreign currency deposits (45 percent), and other types of money (about 4 percent).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Broad money supply<\/strong><\/h2>\n\n\n\n<p><strong>Cash in circulation<\/strong><\/p>\n\n\n\n<p><strong>Demand deposits in rubels (settlement accounts)<\/strong><\/p>\n\n\n\n<p><strong>Other<\/strong><\/p>\n\n\n\n<p><strong>Time deposits in rubels<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish\"><div class=\"wp-block-embed__wrapper\">\n<iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" title=\"Interactive or visual content\" src=\"https:\/\/flo.uri.sh\/visualisation\/16242985\/embed#?secret=4kCSWFsRCV\" data-secret=\"4kCSWFsRCV\" frameborder=\"0\" scrolling=\"no\" height=\"575\" width=\"500\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>The country&#8217;s monetary system consists of cash in circulation (M0), 9 billion rubles; M1, 21.7 billion rubels; the rubel supply (M2), 38.8 billion rubels; and the broad money supply (M3), 71.7 billion rubels.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>With unpredictable government, many keep savings at home<\/strong><strong><\/strong><\/h2>\n\n\n\n<p>A high proportion of foreign currency in the broad money supply was characteristic of the Belarusian economy.<\/p>\n\n\n\n<p>It was something that limited officials\u2019 ability to forecast the money supply. Since Belarus is a small open economy, its authorities find it difficult to manage exchange rates in the long run. Gold and foreign exchange reserves can smooth out fluctuations, but the high dependence of the money supply on exchange rates reduces the efficiency of long-term macroeconomic policies.<\/p>\n\n\n\n<p>The share of liquid funds, such as the ready cash and money on current accounts, increased from 23 percent at the beginning of 2022 to 30 percent in December 2023. This is a potential for a surge in demand for goods and services, which could fuel inflation. In addition, there is a higher possibility of a rapid release of cash into the foreign exchange market, which could trigger a currency crisis.<\/p>\n\n\n\n<p>The proportion of ready cash in circulation has almost doubled from 2020 to 13 percent.<\/p>\n\n\n\n<p>The trend reflects a lack of confidence in the banking system. Despite the expansion of cashless payment services, people keep money in their wallets, drawers and under their mattresses. The growing use of ready cash is often accompanied by the expansion of gray zones of the economy, dubious schemes of trade and currency circulation.<\/p>\n\n\n\n<p>This is also a result of economic policy unpredictability. People prefer to keep their money in check, closer to themselves and away from the establishment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Broad money supply elements<\/h2>\n\n\n\n<p>All, foreign currency deposits, M1, M0<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish\"><div class=\"wp-block-embed__wrapper\">\n<iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" title=\"Interactive or visual content\" src=\"https:\/\/flo.uri.sh\/visualisation\/16243073\/embed#?secret=ct4EjsF3Nz\" data-secret=\"ct4EjsF3Nz\" frameborder=\"0\" scrolling=\"no\" height=\"575\" width=\"500\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p><strong>Reserves, inflationary overhang<\/strong><\/p>\n\n\n\n<p>The broad money supply shows that people\u2019s foreign currency savings, especially those kept on deposits with Belarusian banks, have decreased significantly.<\/p>\n\n\n\n<p>Deposits in US dollars have shrunk from over $8 billion in 2015 to $4.5 billion. Some people have left the country, taking their savings with them; others have lost their income and sold foreign currency to maintain a standard of living. Many are simply afraid of the uncertainty and do not trust the banks.<\/p>\n\n\n\n<p>Officials attribute the decline to Western sanctions.<\/p>\n\n\n\n<p>For many years the NBB, economy, finance and tax ministries have struggled to increase the rubel share, until suddenly Western sanctions helped.<\/p>\n\n\n\n<p>In 2023, the rubel share in the broad money supply exceeded 50 percent. However, while this trend was natural before 2020, it was accompanied by macroeconomic imbalances and a decline in confidence in the financial system later. In addition, it is difficult to forecast how the money supply will evolve.<\/p>\n\n\n\n<p>Recovery growth in 2023 has flooded the economy with cheap money and boosted wages. However, low public confidence in the banking system makes it impossible to fully achieve macroeconomic goals without serious side effects.<\/p>\n\n\n\n<p>The broad money supply enters the new year with a record share of Belarusian rubels, higher deposits in the national currency and lower foreign currency deposits. An excessive increase in the rubel supply creates inflationary risks and requires tighter credit conditions because it is fraught with price increases and a decrease in consumers\u2019 purchasing power.<\/p>\n\n\n\n<p>This year Belarus may face the risk of increased dependence on the US dollar, the Russian ruble, and the Chinese yuan, as well as a potential depletion of foreign exchange reserves.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Ale\u015b Hudzija Belarus\u2019 money supply rose by nearly 20 percent in 2023, the central bank said last month. However, businesses and households have not become richer. The monetary system can be compared to the circulatory system of a living organism. Just as the circulatory system carries nutrients and essential elements throughout the body, the [&hellip;]<\/p>\n","protected":false},"author":83,"featured_media":58042,"template":"","rubric":[21,24],"class_list":["post-58854","longreads","type-longreads","status-publish","has-post-thumbnail","hentry","rubric-economy","rubric-theviewer"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>More money does not make Belarusians richer | Pozirk<\/title>\n<meta name=\"description\" content=\"By Ale\u015b Hudzija Belarus\u2019 money supply rose by nearly 20 percent in 2023, the central bank said last month. 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