M2 falls by another Rs140.8bn in a week

September 02, 2024 (MLN): Broad money (M2), the most widely used measure of money supply in Pakistan, dropped by Rs140.76 billion WoW to Rs35.19 trillion as of August 23, 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 Rs1.39tr, compared to Rs36.58tr recorded by the end of the last fiscal year.

Breaking down the components of M2, the currency in circulation within the economy till August 23, 2024 has fallen by Rs117.05bn WoW to Rs9.01tr.

While in the current fiscal year, the currency in circulation has decreased by Rs143.29bn as compared to Rs9.15tr recorded at the end of June 2024.

Currency in circulation as a percentage of M2 stood at 25.6% compared to 25.83% a week before and 25.02% on June 2024.

Total deposits held with banks were recorded at Rs26.03tr, depicting a decrease of Rs23.77bn WoW and a decrease of Rs1.23tr 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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