Developments in the financial system during the first quarter of 1986

Abstract

The direction of changes in some important monetary and credit aggregates during the first quarter of 1986 veered from the seasonal pattern. The broad measure of money supply (M2) and bank credit to the private sector rose. However, narrow money (M 1) and bank credit to the government sector declined seasonally. While the share of aggregate bank credit to government maintained its lead, commercial and merchant banks' credit operations to the private sector showed a significant improvement. Foreign assets of the banking system showed a sharp decline following increased out payments during the quarter in the face of deteriorating oil earnings. The level of activities in the money market declined following the retirement of N2.0 billion worth of treasury bills during the quarter. Similarly, transactions in the capital market remained generally weak.