Money supply reaches Rs28.12tr in January

March 1, 2022 (MLN): The total money supply circulating in the economy in the seventh month of FY22 was recorded at around Rs 28.12 trillion, according to provisional accounts on monetary aggregates for the month, maintained by the State Bank of Pakistan (SBP).

The money circulating in the economy up to December 2021 was Rs28.62tr while, up to the corresponding month last year, the figure was Rs25.7tr. This means that the money supply decreased by 1.74% MoM while, on an annual basis, it jumped by 9.4%.

After breaking down the overall money supply into broad categories, the SBP data shows that Rs7.01tr was distributed as notes while Rs13.2tr 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 0.65 tr or 10% during the year.

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 0.65 tr or 10% 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 Rs3.9tr in January 2022, up 6% MoM and 15% MoM. 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 8.98 billion rupees in January 2022. While on a monthly basis, they increased slightly by 1%.

Copyright Mettis Link News

Published on: 2022-03-01T10:14:21+05:00

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