Definition
The Monetary Base is the most basic monetary aggregate and is composed of currency in circulation plus banks’ reserves held at the Central Bank. It represents the stock of very high-liquidity money created directly by the monetary authority. Its evolution is key to understanding monetary policy, inflation, and credit dynamics.
Analysis
Between 2018 and 2019, the monetary base exhibits moderate fluctuations, affected by exchange rate episodes and aggregate control programs implemented by the central bank. However, toward the end of 2019 a sharp increase emerges, associated with the growing monetization of the fiscal deficit and exchange rate tensions ahead of the change in administration.
In 2020, a sharp surge in the monetary base is observed, driven by economic support measures during the pandemic, monetary financing of the Treasury, and liquidity expansion aimed at sustaining the financial system. This increase occurred alongside a marked deterioration in money demand, which contributed to accelerating inflation in subsequent months and years.
During 2021 and 2022, the monetary base continued to expand persistently, although with occasional contractions linked to sterilization operations or reserve requirement adjustments. Even so, the overall trend remained one of sustained growth, reflecting a framework in which monetary issuance became a recurrent mechanism of public financing.
In 2023, expansion intensified again, particularly in the final quarter, when the monetary base nearly doubled compared to the same period of the previous year. This process coincided with an accelerated inflationary regime and an increased use of interest-bearing instruments that shifted part of liquidity toward central bank liabilities.
Starting in 2024, an extreme acceleration of the monetary base is observed, driven by sharp nominal adjustments, relative price realignments, and monetary financing in a context of an inflationary shock. Although expansion continues in 2025, growth rates become somewhat more stable, suggesting an attempt to transition toward a less unanchored monetary framework, albeit still characterized by historically high levels of monetary issuance.