KARACHI: Pakistan’s broad money (M2) declined by 0.8 per cent week-on-week (WoW) to Rs34.9 trillion as of January 17, 2025, according to data released by the State Bank of Pakistan (SBP).
The fall in M2 was primarily driven by a 0.9 per cent WoW reduction in total deposits with banks, which stood at Rs25.5 trillion. Simultaneously, Currency in Circulation (CiC) registered a modest 0.2 per cent decline, reaching Rs9.4 trillion, said brokerage firm Topline Securities.
Year-to-date, broad money has contracted by 1.9 per cent, underscoring the cumulative impact of stringent economic policies and subdued credit growth. Meanwhile, CiC as a percentage of M2 has maintained a consistent pattern, standing at approximately 27 per cent, with minor fluctuations over recent months.
While the central bank’s efforts to curb inflationary pressures have been reflected in these figures, the decrease in CiC -- often a measure of cash utilization in the economy—could indicate restrained consumer spending or a shift towards digital transactions.
The SBP, in its quarterly payment systems review for the first quarter of the fiscal year 2025 published last month, said that retail transactions increased by 8.0 per cent in volume, reaching 1.951 billion transactions and totalling Rs136 trillion during the period of July to September. Digital channels processed 87 per cent (1.699 billion) of all retail transactions, while over-the-counter (OTC) channels comprised the remaining 13 per cent (251 million).