"453 billion lek circulated in Albania in May" - Central Bank figures: Growth has been stable
The ratio between money in circulation and money outside banks continues to deepen. According to the latest data from the Central Bank, 453 billion lek, or 4.5 billion euros, are circulating in Albania.
Currency in circulation includes the total amount of banknotes and coins issued by the Bank of Albania, which are used by citizens to make various payments physically, while also including a portion of the money held in commercial banks, excluding money held in deposits.
If we compare the value of total currency in circulation and currency outside banks, we understand that 96% of currency in circulation is outside the banking system. Official statistics show that in April, 429 billion lek or 4.3 billion euros were circulating in Albania outside banks, a slight decrease of 0.1% compared to March.
Despite the fact that this calculation does not include the savings that citizens hold in deposits, it cannot be denied that we continue to be a highly cash-dependent economy.
The growth of money in circulation has been more stable. In May we had an increase of 1.3% compared to April.
On the other hand, the M3 aggregate, which is the broadest indicator of money in circulation and includes physical cash, current accounts, deposits and marketable instruments, amounts to 1.8 trillion lekë or 18 billion euros. Money outside banks accounts for 23.8% of this total.
To reduce the amount of physical money in the economy, the Bank of Albania has undertaken a series of efforts in recent years. According to the Medium-Term Revenue Strategy 2024-2027, this year it is expected to reduce the commissions for the use of POS terminals between second-tier banks and taxpayers, while limits will be set for cash payments for individuals. Meanwhile, the implementation of the fast payment system may begin next year.
To encourage electronic payments, Mastercard has recently launched a program in Albania that includes providing free POS terminals to businesses, thus mitigating their costs.
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