Money Supply Grows by 32 Trillion Won in May, Largest Increase in 9 Months Amid Investments in Samsung and SK Hynix

The money supply in May increased by over 32 trillion won, driven by growth in corporate deposits and margin deposits for securities and derivatives trading.

According to the Money and Liquidity statistics released by the Bank of Korea on July 15, the average broad money supply (M2) in May of this year stood at 4,184.4 trillion won, an increase of 32.2 trillion won, or 0.8%, from the previous month.

This marks the largest monthly increase in nine months, since the 44.5 trillion won rise in August of last year, and continues a seven-month growth streak that began in November of last year.

M2, a broad measure of money supply, includes cash, demand deposits, and instant-access deposits (collectively M1), as well as short-term financial instruments that can be quickly converted into cash, such as money market funds (MMFs), time deposits and savings with maturities of less than two years, certificates of deposit (CDs), repurchase agreements (RPs), financial bonds with maturities of less than two years, and money trusts with maturities of less than two years.

Among these, instant-access deposits increased by 24.3 trillion won in a single month.

This is the largest increase since the statistics were first compiled in 2003, as corporate short-term surplus funds and margin deposits for securities and derivatives trading flowed into the market.

Money trusts with maturities of less than two years also rose by 3.8 trillion won, influenced by the inflow of deposits from semiconductor companies such as Samsung Electronics and SK Hynix.

This reversed the trend from the previous month, which saw a decrease of 3.2 trillion won.

By economic entity, non-financial corporations (+30.1 trillion won), other financial institutions (+11.8 trillion won), and social security organizations and local governments (+3 trillion won) saw increases, while households and non-profit organizations (-19 trillion won) recorded a decrease.

M1, a narrow measure of money supply that includes only cash, demand deposits, and instant-access deposits, reached 1,398.2 trillion won, an increase of 1.9%, or 26.2 trillion won, from the previous month.

Driven by the rise in instant-access deposits, this represents the largest increase in five years and four months since January 2021.

(File Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.