M2 surges by Rs697bn in a week

April 10, 2024 (MLN): Broad money (M2), the most widely used measure of money supply in Pakistan, rose by Rs697.04 billion WoW to Rs33.37 trillion as of March 29, 2024, according to provisional accounts on Monetary Aggregates for the week, maintained by the State Bank of Pakistan (SBP).

This was the largest Week-on-Week jump since June 2023.

In the current fiscal year to date, M2 has risen by Rs1.85tr, compared to Rs31.52tr recorded by the end of FY23.

Breaking down the components of M2, the currency in circulation within the economy till March 29, 2024 has fallen by Rs75.75bn WoW to Rs8.6tr.

While in the current fiscal year, the currency in circulation has decreased by Rs546.76bn as compared to Rs9.15tr recorded at the end of June 2023.

Currency in circulation as a percentage of M2 stood at 25.78% compared to 26.56% a week before and 29.02% on June 2023.

Total deposits held with banks were recorded at Rs24.64tr, depicting an increase of Rs771.09bn WoW and an increase of Rs2.38tr 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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