The financial landscape of Pakistan is witnessing a notable expansion in liquidity as the latest monetary aggregates from the State Bank of Pakistan reveal a sharp uptick in the national money supply. Broad Money, technically referred to as M2, has climbed to a substantial Rs42.31 trillion as of March 13, 2026. This represents a weekly surge of Rs393.18 billion, highlighting a period of active monetary movement within the domestic economy. When viewed through a broader lens, the M2 figure has grown by approximately Rs1.8 trillion since the start of the current fiscal year in June 2025, when the total stood at Rs40.51 trillion. As the most widely recognized gauge of liquidity in the country, these fluctuations in M2 provide critical insights into inflationary pressures and the overall health of the financial system.
A granular look at the components of this money supply shows that the amount of physical cash moving through the economy is also on the rise. Currency in circulation reached Rs11.74 trillion by mid March, marking a weekly increase of Rs148.56 billion. This trend is even more pronounced when considering the cumulative growth for the fiscal year, with cash holdings by the public and financial institutions rising by Rs1.1 trillion since June 2025. This buildup suggests a continued reliance on hard currency for daily transactions and informal economic activity. Interestingly, the ratio of currency in circulation as a percentage of the total money supply has edged up to 27.74 percent, compared to 27.65 percent just a week prior and 26.25 percent back in June 2024.
Parallel to the rise in physical cash, the banking sector has also recorded a healthy influx of capital. Total deposits held with banks, which exclude inter bank and government holdings, were documented at Rs30.52 trillion. This figure reflects a weekly growth of Rs244.79 billion and a total fiscal year to date increase of over Rs708 billion. The simultaneous rise in both bank deposits and currency in circulation indicates that while the formal banking net is expanding, the appetite for liquid cash remains a dominant feature of the Pakistani market. For policymakers and financial analysts, balancing these two pillars of the money supply is essential for maintaining monetary stability and managing interest rate expectations in an evolving digital finance era.
From a technical standpoint, the State Bank of Pakistan defines M2 through two distinct lenses. On the liability side, it encompasses the total sum of currency in circulation, non government sector deposits including foreign currency accounts held by residents, and other specific deposits with the central bank. Conversely, from the asset side, it is calculated as the sum of net domestic assets and net foreign assets across the entire banking system, including both the central bank and scheduled commercial banks. This comprehensive measurement serves as the backbone for economic planning, allowing the state to monitor how wealth is being distributed and utilized across various sectors of the economy.
The current trajectory of M2 suggests that the Pakistani economy is navigating a phase of high liquidity, which could have various implications for future fiscal policies and the transition toward a more structured financial environment. As the government continues its push toward documented and Sharia compliant financial systems, the monitoring of these broad money aggregates remains a vital tool for ensuring that the expansion of the money supply aligns with national growth targets. With the fiscal year progressing, the market will be closely watching whether this momentum in deposit growth and currency circulation continues to accelerate or stabilizes in response to central bank interventions.
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