M2 falls by Rs286.4bn

May 17, 2024 (MLN): Broad money (M2), the most widely used measure of money supply in Pakistan, dropped by Rs286.39 billion in the past two days to Rs33.47 trillion as of May 05, 2024, according to provisional accounts on Monetary Aggregates maintained by the State Bank of Pakistan (SBP).

When compared to June 2023, M2 has risen by Rs1.94tr, compared to Rs31.52tr recorded by the end of the last fiscal year.

Breaking down the components of M2, the currency in circulation within the economy till May 05, 2024 has increased by Rs1.67tr in the past two days to Rs10.53tr.

While in the current fiscal year, the currency in circulation has risen by Rs1.38tr as compared to Rs9.15tr recorded at the end of June 2023.

Currency in circulation as a percentage of M2 stood at 31.45% compared to 26.23% on May 03, and 29.02% on June 2023.

Total deposits held with banks were recorded at Rs22.82tr, depicting a decrease of Rs1.94tr in the past two days and an increase of Rs561.76bn 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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