At the end of May 2020, cash circulation reached 289.6 billion dirhams, according to the latest monetary statistics from Bank Al-Maghrib. An amount up 15.7% since the start of the year (+39.4 billion) and 20.4% compared to the end of May 2019 (+49 billion). And this, at a time when bank deposits have been almost flat since the start of the year (+ 0.5%). Barely 4.6 billion dirhams were added to the outstanding amount which stood at the end of May at 953.2 billion dirhams.
Remember that cash outflows from the banking system are not a new phenomenon, since the trend has been there for several years. But it accelerated in 2019 with the fear on the part of economic operators to undergo more controls by the tax administration. With the health and economic crisis, the state of emergency and confinement, cash outflows have become even more massive. The various amnesties and regularization operations, adopted by the government in the 2020 finance law to restore confidence, were ineffective in this particular context which, on the contrary, worsened the situation. For some observers and experts, these measures have lapsed and there is an urgent need to adjust them or adopt more radical ones, such as an advance tax prescription.
In the meantime, this problem of cash outflows weighs heavily on the banking system. The banks’ cash flow, already in deficit, suffers, which forces Bank Al-Maghrib to increase its refinancing which, despite the drop in the key rate, still has a cost. Knowing that the banks face a high demand for credits, emanating especially from the companies which need to start again their activities after the period of confinement, and that they are called to make an effort as regards distribution of credits, this situation becomes very problematic because they have to find sources of financing by all means (capital increases, bond loans, suspension of the distribution of dividends, etc.).
This issue should also encourage stakeholders to accelerate the deployment of mobile payment, which can help reduce the circulation of cash. Even if the system is operational and the operators have launched their solutions, the ecosystem remains incomplete without the involvement of traders. The latter feared the traceability of transactions, more than ever need strong guarantees and incentives to join the mobile payment system.