M2 surges by Rs5tr in FY24

July 18, 2024 (MLN): Broad money (M2), the most widely used measure of money supply in Pakistan, surged by Rs5.03 trillion to Rs36.56 trillion as of June 30, 2024 compared to last year, according to data released by State Bank of Pakistan (SBP).

In percentage terms, M2 grew 16% 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 June 30, 2024 has increased by Rs4.36bn YoY to Rs9.15tr.

Currency in circulation as a percentage of M2 stood at 25.04% compared to 29.02% in June 2023.

Total deposits held with banks were recorded at Rs27.24tr, depicting an increase of Rs4.98tr or 22.4% YoY.

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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