Qatar recorded the highest broad money supply growth in the region in 2011 and during the first eight months of 2012. The country's broad money supply or M2 grew by 17.1 percent in 2011 and 19.1 percent in the year until August 2012, to reach $101bn.
"This is because the trends in hydrocarbon wealth creation and government spending were particularly strong in Qatar, driving rapid credit growth. As a result, quasi-money went up substantially," a QNB Group analysis noted .
In response to Qatar's strong growth in money supply, Qatar Central Bank started issuing treasury bills in May 2011 to lap up the excess domestic liquidity and also to help build a Qatari riyal yield curve.
The analysis noted GCC countries continue to have ample domestic liquidity. Higher energy prices and increased hydrocarbons production have driven growth in credit, resulting in an expansion of the money supply. The main driver of money supply growth is credit expansion. However, there is considerable variation in liquidity growth across the GCC.
Qatar had the most rapid credit growth in the region, with loans extended by banks going up by 18.5 percent in the year up to August 2012 to $131.4bn.