Currency circulated as notes mounted by 18% YoY in December

February 16, 2021 (MLN): The total money supply circulating within the economy in December 2020 has been recorded at around Rs.25.97 trillion, according to provisional accounts on Monetary Aggregates for the month, maintained by the State Bank of Pakistan.

The money circulating within the economy until last month was Rs.25.4 trillion while until the corresponding month of last year, the figure was Rs.22.4 trillion. This means that the money supply has increased 16% over the year and 2% over the month.

Having broken down the overall money supply into broad categories, the SBP data shows that a total of Rs.6.19 trillion were circulated as notes while Rs.11.759 trillion accounted for transferable deposits which comprise all deposits that are exchangeable on demand at par without penalty/restriction.

The currency circulated as notes which has been high in Pakistan relative to other developed and emerging economies because of high informal economy, rose by over Rs 927 billion or 18% over the year. To highlight, in May 2020, Notes in circulation crossed the Rs 6 trillion mark, and since then it has consistently stayed above that mark. This reflects higher cash withdrawals by depositors to meet needs during the lockdown period.

Apart from this, other deposits constituted Rs.3.64 trillion in Dec’20, up by 14%YoY. Other deposits represent all claims other than transferable deposits in national or foreign currency that are represented by evidence of deposits.

On the other hand, coins circulated declined from Rs. 8.8 billion in Dec’19 to Rs. 8.5 billion in Dec 2020. While, on monthly basis, it diminished from Rs 9 billion.

Furthermore, Rs.275.84 billion worth of deposits were held with post offices while National Saving Schemes held Rs.4.09 trillion, marking a growth of 8% YoY from Rs.3.8 trillion.

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