Pakistan has witnessed a notable expansion in its monetary base as Broad Money, commonly referred to as M2, reached Rs42.75 trillion as of April 3, 2026. According to the latest data released by the State Bank of Pakistan, this figure represents a week on week increase of Rs115.75 billion. The growth in the money supply highlights the ongoing liquidity shifts within the national economy, especially when viewed against the performance of the current fiscal year. Since June 2025, the M2 supply has surged by approximately Rs2.25 trillion, climbing from the Rs40.51 trillion recorded at the close of the previous fiscal year.
A detailed breakdown of the components of M2 reveals a significant shift in how liquidity is being held within the system. The currency in circulation, which represents the total balance of banknotes and coins held by the general public and financial institutions, fell by Rs137.19 billion on a week on week basis to stand at Rs11.93 trillion. However, despite this short term dip, the current fiscal year has seen a substantial long term increase in physical cash usage, with currency in circulation rising by Rs1.3 trillion compared to the Rs10.63 trillion noted at the end of June 2025. This fluctuation reflects the complex relationship between physical cash demand and digital or formal banking preferences among the populace.
In terms of the overall monetary composition, currency in circulation as a percentage of M2 stood at 27.91 percent by the start of April. This is a slight decrease from the 28.31 percent recorded just one week prior, though it remains notably higher than the 26.25 percent seen in June 2024. This ratio is a key indicator for economists and policymakers, as it helps determine the level of documentation within the economy and the public’s reliance on cash versus formal banking instruments. The slight weekly decline suggests a temporary movement of funds back into the regulated banking sector.
The banking sector itself reported a significant boost in liquidity, with total deposits held with banks reaching Rs30.77 trillion. This represents a weekly increase of Rs255.02 billion and a total fiscal year to date growth of Rs959.69 billion. It is important to note that these figures specifically track the deposits of the non government sector and residents foreign currency holdings, while excluding inter bank deposits and those belonging to government or foreign constituents. The steady rise in deposits indicates a growing pool of formal savings, which provides banks with the necessary capital to facilitate lending and investment across various industrial and commercial sectors.
In Pakistan, M2 is considered the most comprehensive and widely utilized measure of the money supply. From a liability perspective, it is calculated by summing the currency in circulation, total non government deposits, and other specific deposits held with the central bank. From the asset side, it represents the sum of net domestic assets and net foreign assets across the entire banking system, including the State Bank of Pakistan and all scheduled banks. Monitoring these figures is essential for understanding inflationary pressures and the overall health of the financial system, as the SBP continues to manage the delicate balance between economic growth and monetary stability.
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