Broad Money (M2) Grows 12.5%: Nepal’s Liquidity Expands in 2025

Nepal’s monetary survey shows that Broad Money (M2) increased by 12.5% year-on-year in August 2025, reaching Rs. 7.78 trillion. This marks a significant expansion in the country’s liquidity, driven by strong growth in money supply (M1+), savings, and call deposits.

The central bank data indicates that M1+ (currency, demand deposits, savings, and call deposits) surged by 32.8% compared to last year, signaling rising household and business deposits in the banking system. In particular, savings and call deposits grew by Rs. 901.7 billion (+38.7%), reflecting improved confidence in financial institutions. Currency circulation also rose by 13.4%, while demand deposits increased by 24.5%.

Interestingly, while short-term liquidity surged, time deposits fell by Rs. 193 billion (−5.2%), showing a shift from fixed-term savings to more flexible deposit accounts. Economists believe this reflects households’ and businesses’ preference for liquidity amid uncertain economic conditions.

Overall, the expansion of broad money suggests that the financial system is flush with liquidity, but the challenge lies in channeling these funds into productive investments rather than fueling consumption or imports.