M2 falls another Rs140bn

August 06, 2024 (MLN): Broad money (M2), the most widely used measure of money supply in Pakistan, dropped by Rs140.43 billion WoW to Rs35.15 trillion as of July 26, 2024, according to provisional accounts on Monetary Aggregates for the week, maintained by the State Bank of Pakistan (SBP).

When compared to June 2024, M2 has decreased by Rs1.41tr, compared to Rs36.56tr recorded by the end of the last fiscal year.

Breaking down the components of M2, the currency in circulation within the economy till July 26, 2024 has fallen by Rs158.06bn WoW to Rs9.07tr.

While in the current fiscal year, the currency in circulation has decreased by Rs83.01bn as compared to Rs9.15tr recorded at the end of June 2024.

Currency in circulation as a percentage of M2 stood at 25.81% compared to 26.15% a week before and 25.04% on June 2024.

Total deposits held with banks were recorded at Rs25.93tr, depicting an increase of Rs18.1bn WoW and a decrease of Rs1.31tr FYTD.

To note, the deposits held with banks exclude inter-bank deposits, deposits of governments, and foreign constituents.

Currency in circulation represents the balance of banknotes and coins in circulation, held by the general public and financial institutions.

In Pakistan, M2 is the most widely used definition of broad money.

From liability side, it is measured as a sum of currency in circulation; total deposits of non-government sector, including residents’ foreign currency deposits; and other deposits with SBP.

And from asset side, M2 is a sum of net domestic assets and net foreign assets of the banking system (i.e. SBP and scheduled banks).

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