The monetary landscape of Pakistan is experiencing a significant expansion as Broad Money (M2), the primary indicator of liquidity in the economy, reached a new peak of Rs 42.72 trillion. According to the latest weekly data released by the State Bank of Pakistan (SBP) for the period ending March 20, 2026, the money supply surged by Rs 404.4 billion within a single week. This growth reflects a broader trend seen throughout the current fiscal year, with M2 rising by approximately Rs 2.21 trillion since June 2025, when the figure stood at Rs 40.51 trillion.
A detailed breakdown of the components contributing to this surge reveals a sharp rise in the amount of cash held by the public and financial institutions. The currency in circulation grew by Rs 363.44 billion week-on-week, bringing the total to Rs 12.1 trillion. For the current fiscal year to date, the volume of cash outside the formal banking system has increased by Rs 1.47 trillion. This trend is particularly notable as currency in circulation now accounts for 28.33 percent of the total M2 money supply, up from 27.74 percent just a week prior and significantly higher than the 26.25 percent recorded in June 2024.
While cash holdings are on the rise, the formal banking sector also reported a modest increase in its resource base. Total deposits held within the banking system were recorded at Rs 30.57 trillion, marking a weekly increase of Rs 43.53 billion. Since the start of the fiscal year, bank deposits have grown by a total of Rs 752.37 billion. It is important to note that these figures specifically track the deposits of the non-government sector and residents’ foreign currency accounts, excluding inter-bank holdings and government-owned deposits to provide a clearer picture of private sector liquidity.
In the technical framework of the State Bank of Pakistan, M2 serves as the most comprehensive definition of broad money. From a liability perspective, it encompasses all currency in circulation, total non-government deposits, and other miscellaneous deposits held with the central bank. From an asset standpoint, it is calculated as the sum of the banking system’s net domestic assets and net foreign assets. The current data suggests that both the physical cash economy and the digital ledger of the banking system are expanding simultaneously, though the preference for liquid cash appears to be outpacing deposit growth in percentage terms.
The continued rise in M2 and the high ratio of currency in circulation are often closely monitored by economic analysts as indicators of inflationary pressure and the documentation level of the economy. With over 28 percent of the nation’s total broad money now circulating as physical banknotes and coins, the challenge for monetary authorities remains the incentivization of the formal banking sector. As the 2026 fiscal year enters its final quarter, these figures provide a critical baseline for understanding the volume of capital currently moving through the Pakistani market.
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