Derick Latibeaudiere, Bank of Jamaica governor. - IAN ALLEN/STAFF PHOTOGRAPHER
AS AT end November 2005, the stock of currency issue stood at $28.113 billion, according to a statement from the Bank of Jamaica. This is expected to increase by some $7.0 billion or approximately 24.0 per cent in December in comparison to an increase of $5.722 billion or 21.5 per cent in December 2004. Over the three year period 2002 to 2004, currency issue in-creased by 23.6 per cent on average in the month of December.
During December of each year, the volume of currency issued by the Bank of Jamaica (BoJ) attracts special interest as an indicator of seasonal retail spending by the public, the BoJ stated. Banks also hold more cash in their vaults to ensure they have adequate amounts to stock their automated banking machines (ABMs) and to meet the public's demand in general. As a result, the increase in BOJ currency issue in December tends to be very large.
While this increase in currency continues to reflect heightened commercial activity, its reliability as an indicator of total spending may be declining. Three other factors - the proliferation of ABMs, the use of point of sale (POS) facilities as well as changes in the intensity of the use of cheques - exert strong and sometimes, offsetting influences, on the demand for currency notes and coins.
The use of ABMs tends to increase the demand for cash. On the other hand, the increased use of POS facilities and cheques offset some of the need for cash. The annual increase in currency is therefore not a pure indicator of additional spending, since the other dynamic changes in the means of payment are so important. Complementary data such as exchange rate and price movements are useful in assessing the significance of changes in the demand for currency.
