The Central Bank rebuffed the claims of money printing in recent times to settle government bills or even for the payment of interest payments of previous borrowings and pointed at the mostly successful bill auctions in which it managed to raise the full amount offered from the market itself.
Responding to a question on the subject, Central Bank Governor Dr. Nandalal Weerasinghe said he doesn’t see any signs of increase in reserve money expansion, the term used in economics for money printing.
Meanwhile, he also shrugged off concerns raised by certain sections for providing liquidity to the interbank market via term repos, which are aimed only at addressing short-term liquidity requirements of banks and thereby preventing upward pressure on the rates.
“In terms of the amount of reserve money expansion – which is the proper term for money printing – it in fact has shown a deceleration,” he told the media at the post monetary policy meeting press conference a fortnight ago.
He also said as the direct contributions to bill auctions became needless in the first few weeks of the year due to the auctions getting fully subscribed, reserve money expansion had also been curtailed.
During last two weeks the bill auctions went under-subscribed.
The reserve money increased by Rs.59, 020.14 million in the week ended on February 2, 2023 mainly due to the increase in deposits held by commercial banks with the Central Bank.
Certain sections interpret the increase in Central Bank’s total bill holdings as similar to printed money, but the Central Bank says there remains a difference between the two as increase in all such holdings doesn’t result in actual cash which comes into circulation.