M2 falls to Rs35.9tr

October 16, 2024 (MLN): Broad money (M2), the most widely used measure of money supply in Pakistan, dropped to Rs35.88 trillion as of October 04, 2024, according to State Bank of Pakistan (SBP) data.

It has decreased by Rs677.41 billion in the current fiscal year, compared to Rs36.55tr recorded by the end of June 2024.

Breaking down the components of M2, the currency in circulation within the economy till October 04, 2024 has decreased by Rs121.31bn to Rs9.03tr as compared to Rs9.15tr recorded at the end of June.

Currency in circulation as a percentage of M2 stood at 25.18% compared to 25.04% in June 2024.

Total deposits held with banks were recorded at Rs26.72tr, depicting a decrease of Rs543.33bn 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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