SEOUL, September 23 (AJP) — Cash remains abundant in South Korea, where the economy is running at its strongest pace since the pandemic. But more of that money appears to be making its way back into the banking system before it can circulate for long in everyday spending.
The Bank of Korea said Wednesday that net currency issuance over the 10 business days through Sept. 23 totaled 3.6451 trillion won ($2.70 billion), down 792.3 billion won from a year earlier, mainly because the Chuseok holiday shortened to four days from seven.
“Almost everything here is paid in cash or by bank transfer,” said Kang Myung-ja, who runs a food business at Namdaemun Market in central Seoul.
Chuseok, Korea's autumn harvest holiday, is one of the country's biggest annual holidays, when families traditionally travel to their hometowns, shop for food and gifts and give cash to younger relatives.
Net currency issuance refers to cash supplied by the central bank to financial institutions minus currency returned to the BOK.
Compared with 2024, when the Chuseok break lasted five days, gross currency issuance was little changed at 3.9436 trillion won this year, versus 3.9138 trillion won.
Currency returned to the BOK, however, jumped 78.6 percent to 298.5 billion won from 167.1 billion won.
From June through August, 5.63 trillion won in currency was returned to the central bank, up 82.7 percent from 3.08 trillion won during the same period last year.
Currency issuance over the three months fell 33.9 percent to 4.23 trillion won from 6.40 trillion won, turning net issuance to a negative 1.39 trillion won from a positive 3.32 trillion won a year earlier.
At Namdaemun, Kang said the cash passing through her business rarely stays in the till overnight.
“Once I finish for the day and the cash box fills up, I take the money straight to the bank and deposit it,” she said. “Otherwise there is too much cash to keep around, and it gets in the way of running the business.”
The rise in returned currency does not mean physical cash itself is disappearing.
Currency outstanding stood at 215.86 trillion won at the end of August, up about 6.5 percent from 202.66 trillion won a year earlier. Of the total, 195.4 trillion won was held in 50,000-won notes.
What is changing more clearly is where money is being parked once it enters the banking system.
Bank time deposits increased by 20.3 trillion won in August after surging 42.3 trillion won in July, according to the BOK's latest financial market data.
The central bank said household funds shifted back into time deposits in August, while demand deposits and other accounts that can be withdrawn readily fell by 14 trillion won after an 80.8 trillion-won decline in July.
Higher deposit rates have strengthened the incentive to lock money away.
The average rate on newly handled savings deposits at banks rose to 3.21 percent in July from 2.51 percent a year earlier, while the rate on new one-year time deposits climbed to 3.48 percent from 2.52 percent.
“With rates higher and no obvious place to grow the money, I would rather put it into savings or a time deposit and let it grow safely,” she said.
The national figures do not trace individual banknotes and do not show that currency returned to the BOK went directly into time deposits.
They do, however, show two trends occurring at the same time: sharply higher currency returns to the central bank and a strong increase in money flowing into time deposits as banks offer higher rates.
A similar pattern emerged among shoppers at Namdaemun.
Kim Yoo-hyun said she had withdrawn cash ahead of a trip to her hometown of Changwon in southeastern Korea to give money to younger relatives during Chuseok.
“For me, cash is basically for two things — shopping at traditional markets and giving money to family members,” Kim said. “The family gifts probably account for more because we have a very large family.”
Her boyfriend, Kim Joon-hong, said he had not withdrawn cash specifically for the holiday and usually pays by card or Samsung Pay, but still uses cash when visiting traditional markets.
Both said money they receive in cash now tends to move into savings rather than remain available for everyday spending.
“Almost all of it goes into savings,” Kim Yoo-hyun said, adding that recent stock-market volatility had made her less willing to keep spare money invested in equities.
Kim Joon-hong said he had made a similar shift toward savings products.
A commercial bank employee in central Seoul, who requested anonymity because the employee was not authorized to speak publicly, said cash withdrawals at the branch still rise sharply before Chuseok.
The employee estimated that withdrawals can reach at least three times ordinary levels around the holiday, although the seasonal increase has eased somewhat compared with roughly a decade ago.
Pre-Chuseok net currency issuance rose in 2025 even as electronic and mobile payments continued to expand, while the BOK cited the shorter holiday as the main reason for this year's drop.
At Namdaemun, cash still changed hands across market counters and was withdrawn for family gifts.
What appears to be changing is what happens afterward.
More cash is returning quickly through the banking system, while higher-yielding savings and time deposits are drawing in funds that might otherwise have remained immediately available for spending.
AJP Takeaways
- South Korea's net currency issuance ahead of Chuseok fell 17.9 percent to 3.6451 trillion won, with the BOK citing the shorter holiday as the main reason.
- Currency returned to the BOK from June through August jumped 82.7 percent from a year earlier, turning net issuance negative over the three months.
- Bank time deposits rose 20.3 trillion won in August after a 42.3 trillion-won increase in July, while newly offered deposit rates also rose.
- Cash itself has not disappeared: currency outstanding rose 6.5 percent from a year earlier, while traditional-market purchases and holiday cash gifts continued to generate seasonal demand.
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