Money Supply in Oman

Abstract

The meaning of money supply in an arrow sense is currency and demand deposits. In Oman, it has increased very slowly till 1970 and then started to increase broadly till now. This increment is due to the development of the oil exports, so that the share of its currency becomes more than 50% of its money supply in the narrows sense during the period 1973‐2000. But this percentage started decreasing since 2001 compared with demand deposits. The econometric analysis concluded that there is a ppositive relationship between money supply and such independent variables as gross domestic production, government deficit, international reserves and oil export. It was also concluded that there is a positive relationship between money supply in the wide sense and oil export. The monetary indicators showed that the net domestic credit allowed to the private sector and the net foreign assets of the banking system are the main factors that positively affect money supply. It was also noted that the quasi money such as time deposits, saving deposits, capital account and reserve account has negatively affected money supply during the period 1974‐2003.