Bank of Uganda in the past year released more cash into circulation than what was deposited into its reserves by the commercial banks.
The Central Bank announced this week that the value of currency in circulation rose from Shs. 3.8 Trillion in June 2017 to 4.3 Trillion in June 2018.
This is an 11.6 percent growth from the previous year.
This was detailed in the central bank’s Annual Report which was publicized on Tuesday.
According to the report, the value of bank notes in circulation grew from 3.7 Trillion in 2017 to 4.2 in 2018, whereas the value of coins in circulation decreased slightly from Shs. 159Billion in 2017 to 139Billion in 2018.
According to Central Bank Governor Prof Emmanuel Tumusiime Mutebile, the increase was because commercial banks withdrew much more cash from the Central Bank than they deposited.
The banks, Mutebile said, withdrew up to Shs 448Billion more than they deposited with the Central Bank.
“The net change reflected the public’s increase in demand for money to finance their economic activities,” he said.