Pakistan’s broad money supply surges by Rs5.03 trillion

WEB DESK: The State Bank of Pakistan (SBP) has reported a significant surge in the country’s broad money supply (M2), which increased by Rs5.03 trillion, reaching Rs36.56 trillion as of June 30, 2024.

This marks a 16 per cent growth from the Rs31.52 trillion recorded at the end of the previous fiscal year.

Breaking down the components of M2, the currency in circulation as of June 30, 2024, increased by Rs4.36 billion year-on-year, amounting to Rs9.15 trillion. However, the currency in circulation as a percentage of M2 declined to 25.04 per cent from 29.02 per cent in June 2023.

Total deposits held with banks also saw a substantial rise, increasing by Rs4.98 trillion or 22.4 per cent year-on-year, totalling Rs27.24 trillion. It is important to note that these deposits exclude inter-bank deposits, government deposits, and foreign constituents’ deposits.

Currency in circulation refers to the balance of banknotes and coins held by the general public and financial institutions. In Pakistan, M2 is the most widely used measure of broad money.

From a liability perspective, it comprises the currency in circulation, total deposits of the non-government sector (including residents’ foreign currency deposits), and other deposits with the SBP.

From an asset perspective, M2 includes the net domestic assets and net foreign assets of the banking system, which consists of the SBP and scheduled banks.

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