Israel has witnessed a significant contraction in its M1 money supply for the second consecutive month, with the latest data indicating a further downturn. As of August 2025, the M1 money supply has decreased by 4.9% year-over-year, compared to a 4.0% contraction in July of the same year. This data, updated on September 14, 2025, underscores a persisting trend in the reduction of available money flowing through the economy.
The M1 money supply, critical for understanding cash availability made up of currency in circulation and demand deposits, is an essential indicator of economic liquidity and monetary climate in the financial sector. The deepening contraction from July to August could suggest tighter fiscal and monetary conditions in Israel or decreasing consumer and business demand for immediate cash assets.
This downward trend emphasizes growing concerns about Israel's economic outlook amid global challenges. As investors and policymakers keep a close eye on these developments, potential strategies to stimulate liquidity and confidence in the financial system might play a crucial role in shaping future economic interventions.
