SBP reports Rs28.22 billion weekly increase in broad money

KARACHI: Broad money (M2), the primary measure of money supply in Pakistan, experienced a weekly increase of Rs28.22 billion, reaching Rs35.13 trillion as of June 21, 2024, according to provisional accounts on Monetary Aggregates released by the State Bank of Pakistan (SBP).

Compared to the end of June 2023, M2 has surged by Rs3.61 trillion from Rs31.52 trillion, marking a substantial annual growth.

Breaking down the components, the currency in circulation within the economy increased by Rs96.17 billion week-on-week to Rs9.4 trillion by June 21, 2024. For the current fiscal year, this represents a rise of Rs248.07 billion, up from Rs9.15 trillion at the end of June 2023.

The proportion of currency in circulation as a percentage of M2 stood at 26.75 per cent, up from 26.5 per cent the previous week, but down from 29.02 per cent in June 2023.

Total bank deposits were recorded at Rs25.6 trillion, reflecting a weekly decrease of Rs66.73 billion.

However, they have increased by Rs3.34 trillion since the beginning of the fiscal year. It is important to note that these figures exclude inter-bank deposits, government deposits, and foreign constituent deposits.

Currency in circulation includes the balance of banknotes and coins held by the public and financial institutions. In Pakistan, M2 is the most widely recognised definition of broad money.

On the liability side, M2 is calculated as the sum of currency in circulation, total deposits of the non-government sector (including residents’ foreign currency deposits), and other deposits with the SBP.

From the asset side, M2 comprises net domestic assets and net foreign assets of the banking system, which includes both the SBP and scheduled banks.

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