March 31, 2022 (MLN): The total money supply circulating in the economy during the month of February 2022 was recorded at around 28 trillion rupees, according to the provisional accounts on monetary aggregates for the month, maintained by the State Bank of Pakistan (SBP). .
The money circulating in the economy up to January 2022 was Rs28.1tr whereas, up to the corresponding month last year, the figure was Rs25.9tr. This means that the money supply increased by 8% year-on-year while, on a monthly basis, it remained largely unchanged.
After breaking down the overall money supply into broad categories, the SBP data shows that Rs7.01tr was distributed as notes while Rs13.1tr represented transferable deposits which includes all deposits exchangeable on demand at par without penalty/restriction.
Currency circulated in the form of banknotes which were high in Pakistan compared to other developed and emerging economies due to the strong informal economy which grew by more than Rs 0.59 tr or 9% during the year.
Meanwhile, it is worth mentioning that in 2018 when the PTI government came to power, the total currency in circulation in the country was around Rs 4.3 tr. Since then until the start of the Covid period in March 2020, this figure jumped to Rs5.6tr. In May 2020, banknotes in circulation crossed the Rs6tr mark, and since then they have constantly remained above this mark.
This reflects higher cash withdrawals by depositors to meet pandemic needs. Additionally, cash distribution programs amid Covid-19 as a relief measure can also be seen as a significant contributor to the growing circulation of currency.
Apart from this, other deposits constituted Rs3.95tr in February 2022, up 13% YoY and down 1% YoY. Other deposits represent all claims other than deposits transferable in national or foreign currency which are represented by proof of deposit.
Similarly, coins in circulation slightly increased by 8% year-on-year to reach 9 billion rupees in February 2022. While on a monthly basis, they increased slightly by 1%.
In addition, deposits worth Rs182 billion were held at post offices, down 31% y/y and 3% m/m, while National Savings Schemes held Rs3.7 tn , marking a decline of 6% year-on-year while, on a monthly basis, it remained stable.
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Published on: 2022-03-31T23:18:43+05:00