Broad money (M2)

Growth
 GROUP:4
SL. No Name ID
1 Md. Masud Parves 51972001
2 Mohammad Zahirul Islam 51972007
3 Shaila Afrin Mousumi 51972008
4 S.M. Morshed 51972052
Md. Masud Parves
ID: 51972001
 BROAD MONEY
 The most flexible method for measuring an economy's
money supply, accounting for cash and other assets
easily converted into currency.

 Denoted by M2.

 Consists of narrow money (M1) and quasi money (QM).

Component of M2 in Bangladesh

Money Supply (M1)

Quasi Money(QM) [[[[

• Currency Outside banks

Time Deposits with • Deposits of Financial
DMBs Excludes Institutions with Bangladesh
Inter bank Deposits Bank (except DMBs)
and Government • Demand Deposits with DMBs
Deposits. Excludes Inter bank Deposits
and Government Deposits
Mohammad Zahirul Islam
ID: 51972007
 BROAD MONEY CALCULATION
1. NET FOREIGN ASSETS
2. NET DOMESTIC ASSETS
• Claims on Public Sector
Add: A. DOMESTIC CREDIT
• Claims on Govt.(net)
(a) BANGLADESH BANK • Claims on Other Public
(b) DEPOSIT MONEY BANKS • Claims on Private Sector

Less: B. NET OTHER ASSETS

(a) BANGLADESH BANK • Government Deposits
• Inter bank Deposits
(b) DEPOSIT MONEY BANKS
Shaila Afrin Mousumi
ID: 51972008
 Month Actual Growth Projected Growth
November’2009 20.22 20.22
Broad July’2010
December’2010
22.44
21.66
15.50
18.80
June'2011 21.34 15.20
money December '2011
June,2012
19.09
17.39
18.70
17.00

Growth December '2012

June '2013
19.01
16.71
16.00
17.70
December '2013 15.56 17.20

Rate in June '2014

December '2014
16.09
13.35
16.10
16.00
June '2015 12.42 16.50
percent December '2015
June '2016
13.07
16.43
15.00
15.00
December '2016 13.83 14.80
June '2017 10.88 15.50
December '2017 10.69 12.90
June '2018 9.24 13.90
December '2018 9.41 10.20
June,2019 9.88 12.00
July '2019 11.16 12.00
 M2 Growth Rate Timeline
25.00
Actual Growth Projected Growth
22.44
21.34
20.00
17.39 17.70
16.10 16.50 16.43
15.50 15.20 17.00 16.71 15.50
16.09
15.00 13.90
15.00
12.50
12.00 12.00
12.42 11.30
10.88 11.16
10.00 9.88
9.24

5.00

0.00
jun'14

Dec'19
jun,12

jun,19

jul'19
jun'10

jun'11

jun'13

jun'15

jun'16

jun'17

jun'18

June,20
S.M. Morshed
ID: 51972052
Reasons for low growth rate of M2
• Low money-supply growth had impacted the country's economic growth
• Lower demand for funds from the public sector.
• Economists view that the supply side of money and demand side of money
has imbalance leading to a sharp fall in the growth of the broad money.
• The demand for loans from the domestic sources remained low as many
are borrowing from overseas sources.
• If low demand exist, then there is positive relationship between the GDP
and the demand.
• Low broad money helped keep the inflation at low level.
• Recently, low investment , mild inflation, liquidity crisis are reason for
broad money growth .