The Saudi Money Supply Rises to $824 Billion as High-Interest Deposits are Preferred by Savers

RIYADH: The money supply M3 of Saudi banks increased by approximately 9.39% from the same time last year to SR3.09 trillion ($824.3 billion) in May. The Saudi Central Bank, or SAMA, said that time and savings deposits made up 35.16 percent of the total, which was the biggest percentage since 2009 but somewhat lower than the 16-year high of 35.2 percent set in March.

A noticeable change in deposits has been the main driver of the development. To benefit from greater interest rates, more and more savers are securing their funds in term deposits. Among all money categories, these interest-bearing accounts have expanded at the quickest rate, which is indicative of depositors’ desire for larger returns in an environment with high interest rates. Term deposits are more popular when interest rates are high because they provide more returns in return for holding money for a predetermined amount of time.

At around SR1.5 trillion, or about 48.6 per cent of M3, demand deposits money in checking accounts that may be withdrawn on demand—remain the single greatest component of the money supply, notwithstanding this change.

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