Monetary Survey

                 Analytical Balance sheet of the Banking System

                                 Monetary Survey

           Assets                                                Liabilities

Net foreign assets (NFA)                                Broad Money (M2)

Net Domestic assets (NDA)                                Narrow money (M1)

                                                                                  Currency in circulation (CY)

                                                                                  Demand deposit (DD)

 Net domestic credit ) (NDC)                            Quasi-money (QM

 Net Claims on the government  (NCG)             Time and saving deposits (TD)

 Claims on the private sector                              Foreign currency deposits (FC)

 Other items, net (OIN)

Net foreign assets include the foreign currency value ( US dollar as legal tender) of the net official international reserves (on the assets side, including foreign currency, deposit, securities other than shares, the country’s IMF subscription in the IMF; on the liabilities side, including short-term liabilities to foreign that is, IMF subscription and deposit of non resident.

Claims/credit on the government (net) is loans by BPA to government. They are shown net government deposits, because there are no loans from BPA/ Central Bank of Timor-Leste to the government..

Claims on the private sector, are in general likely to be insignificant; typically it is the business of the DMBs, not the central bank, to make loans to households and enterprises.

Other Items (net) is a residual category that is usually shown on a net basis. Other item (net) includes the physical assets of bank (on the asset side); provision and miscellaneous item (as a liability side).

On the liabilities side, the monetary survey contains the overall liquidity generated by the banking system, or the stock of money. The money stock consists of currency in circulation outside banks (centavos) plus demand deposit in the banking system. Quasy-money consists of time and savings deposits in the banking system. The concept of broad money (M2) covers the liabilities of the banking system.

Broad money is a main liability of the monetary authorities (BPA), and it plays a central role in monetary analysis and policy in many of central bank (except in Timor-Leste as dolarized country). Reserve money includes mainly currency that has been issued in outside bank (currency in circulation), plus bank deposit with the BPA not include cash in vault because US dollar as a legal tender and there are classified in foreign currency under net foreign assets. It excludes the deposits the government.

Reference:

IMF, Monetary and financial statistics manual, Washington, 2000, 157 pp