Money printing: MP Champika Ranawaka right on the money

21 January 2021 12:02 am Views - 2257

 

Money printing is more formally known as deficit financing. It refers to when the Central Bank finances the government’s budget deficit by creating new money to directly purchase government securities issued by the treasury. The Central Bank’s purchases of treasury securities are reflected in the balance sheet of the Central Bank. Therefore, to quantify the money printed during the relevant period, FactCheck referred to the Central Bank’s purchases of government securities. 

To evaluate this claim, FactCheck consulted the Central Bank’s Daily Operations data set where the Central Bank’s treasury security holdings are published. As of 1 November 2020, the Central Bank held Rs. 488.17 billion worth of government securities. On 1 December 2020, the Central Bank held Rs. 618.12 billion worth of government securities. This indicates an increase in the Central Bank’s government security holdings of Rs. 129.95 billion during the period in question. This, in turn, indicates that an equivalent amount was printed during that same period.

Therefore, FactCheck classifies the MP’s statement as true.       

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