Pakistan’s broad money supply shrinks by over Rs677 billion

ISLAMABAD: As of October 4, 2024, Pakistan’s broad money supply (M2) has fallen to Rs35.88 trillion, according to the latest figures from the State Bank of Pakistan (SBP).

This reflects a drop of Rs677.41 billion since the end of June 2024, when M2 stood at Rs36.55 trillion.

M2 is the most commonly used measure of money supply in the country, capturing the total currency and deposits in circulation.

Breaking down the data, the currency in circulation within the economy has also decreased. By October 4, it had dropped by Rs121.31 billion to Rs9.03 trillion, compared to Rs9.15 trillion in June.

Despite the decline in absolute terms, the percentage of currency in circulation relative to M2 has edged up slightly, rising to 25.18 per cent from 25.04 per cent in June.

According to Mettis Global, total deposits with banks, excluding inter-bank deposits, government deposits, and foreign deposits, also saw a significant decline. As of early October, these deposits stood at Rs26.72 trillion, down by Rs543.33 billion for the fiscal year so far.

M2 represents the total money in an economy from two sides:

Liability side: It includes currency in circulation, deposits from the non-government sector (including residents’ foreign currency deposits), and other deposits held by the SBP.

Asset side: It accounts for the net domestic and foreign assets of Pakistan’s banking system, including the SBP and scheduled banks.

These numbers provide insight into the liquidity of the country’s financial system and reflect the changes in both currency and deposits over the current fiscal year.

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