Broad money increased marginally in April, rising by Lm3.2 million, or 0.1 per cent, leaving its year-on-year growth rate unchanged at 7.2 per cent, the Central Bank of Malta said. Monetary expansion during the month reflected higher credit to the non-bank private sector, but was restrained by the issue of bonds on the capital market.

Narrow money contracted by Lm6.5 million, or 0.4 per cent, driven entirely by a drop in currency in circulation, which fell by Lm9.3 million, or 2.1 per cent. The decline in the latter was dampened by a rise in deposits withdrawable on demand, which increased by Lm2.8 million, or 0.2 per cent. As a result, the annual growth rate of narrow money decelerated further, falling to -2.5 per cent in April, from -1.7 per cent in March.

Intermediate money went up by Lm3.2 million or 0.1 per cent in April, as deposits with an agreed maturity of up to two years rose by Lm9.1 million. Deposits belonging to households continued to grow, offsetting a decline in those belonging to non-bank financial intermediaries. However, deposits redeemable at up to three months’ notice rose only marginally. Meanwhile, foreign currency deposits in intermediate money added Lm6.6 million in April, mainly driven by growth in corporate deposits.

The net foreign assets of the banking system expanded by Lm9.3 million, or 0.5 per cent, in April with a drop in the Central Bank of Malta’s net foreign assets being offset by an increase in those of the rest of the banking system. The annual growth rate decelerated significantly, falling from 16.0 per cent in March to 4.0 per cent in April. The deceleration was attributable to an exceptionally large share capital inflow into one bank, which had boosted the net foreign assets in April 2006.