M2 falls by Rs132bn in a week

January 14, 2025 (MLN): Broad money (M2), the most widely used measure of money supply in Pakistan, dropped by Rs131.61 billion WoW to Rs34.87 trillion as of January 03, 2025, data released by State Bank of Pakistan (SBP) showed.

When compared to June 2024, M2 has decreased by Rs1.01tr, compared to Rs35.88tr recorded by the end of the last fiscal year.

Breaking down the components of M2, the currency in circulation within the economy till January 03, 2025, has increased by Rs51.86bn WoW to Rs9.24tr.

While in the current fiscal year, the currency in circulation has risen by Rs90.23bn as compared to Rs9.15tr recorded at the end of June 2024.

Currency in circulation as a percentage of M2 stood at 26.51% compared to 26.26% a week before and 25.51% on June 2024.

Total bank deposits were recorded at Rs25.58tr, depicting a decrease of Rs186.81bn WoW and a decrease of Rs1.09tr 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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