▲ The Bank of Korea
South Korea's money supply grew by nearly KRW 13 trillion in July, driven by inflows of semiconductor firms' deposits and an increase in time and savings deposits, marking an upward trend for the ninth consecutive month.
According to the "Money and Liquidity" statistics released by the Bank of Korea (BOK) today (September 15), the average broad money supply (M2 basis, average balance) stood at KRW 4,225.6 trillion in July this year, up KRW 12.7 trillion (0.3%) from the previous month.
▲ Money and liquidity in July at a glance.
This marks nine consecutive months of growth since November of last year.
The M2 growth rate is the lowest since February (0.0%).
M2, a broad measure of the money supply, includes short-term financial instruments that can be readily converted into cash, such as cash, demand deposits, and savings deposits with flexible withdrawal (collectively M1), as well as money market funds (MMFs), time and savings deposits with a maturity of less than two years, certificates of deposit (CDs), repurchase agreements (RPs), financial bonds with a maturity of less than two years, and monetary trusts with a maturity of less than two years.
Among these, time and savings deposits with a maturity of less than two years increased by KRW 27.3 trillion in a single month.
This is the largest increase since December 2022.
The BOK explained that this was due to the influx of corporate surplus funds and the return of some funds—which had previously flowed into savings deposits with flexible withdrawal for derivative market investments—back into time deposits.
Monetary trusts with a maturity of less than two years also grew by KRW 11.4 trillion, driven by the inflow of deposits from semiconductor companies and others.
This represents the largest increase since January 2022.
On the other hand, savings deposits with flexible withdrawal decreased by KRW 27 trillion.
This is the largest decline on record since the compilation of statistics began in October 2003.
This was reportedly driven by a decrease in corporate holdings due to value-added tax payments and a reduction in margin deposits for derivative transactions.
By economic sector, non-financial corporations (+KRW 20.6 trillion) and other sectors (+KRW 6.3 trillion) saw increases, while households and non-profit institutions decreased by KRW 11.6 trillion.
The narrow money supply M1 (KRW 1,372.5 trillion), which includes only cash, demand deposits, and savings deposits with flexible withdrawal, fell by 2.2% (KRW 30.4 trillion) from the previous month.
This is the first time M1 has declined since April of last year (-0.03%).
(Photo provided by the Bank of Korea, Yonhap News)
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