Last August, the money supply increased by over 39 trillion won, driven by corporate surplus funds and deposits from semiconductor companies, marking the tenth consecutive month of growth.
According to the Bank of Korea's 'Monetary and Liquidity' statistics released on the 15th, the average broad money supply (M2) for August was 4,266.8 trillion won, an increase of 39.1 trillion won (0.9%) from the previous month. This marks a continuous increase since November of last year.
The M2 growth rate expanded from 0.3% in July to 0.9% in August. Compared to the same month last year, it increased by 5.6%, slightly lower than the previous month's rate of 5.8%. The so-called 'old M2,' which includes exchange-traded funds (ETFs) and other income securities, rose by 0.7% from the previous month and by 9.9% year-on-year.
The broad money supply indicator M2 includes cash, demand deposits, and savings deposits (M1), as well as money market funds (MMFs), time deposits and savings accounts with maturities of less than two years, certificates of deposit (CDs), repurchase agreements (RPs), financial bonds with maturities of less than two years, and short-term financial products that can be quickly converted to cash.
By product, the increase in time deposits and savings accounts with maturities of less than two years rose from 27.3 trillion won in July to 28.7 trillion won in August. This was influenced by an increase in corporate surplus funds and a turnaround in household funds.
The increase in money trusts with maturities of less than two years also rose from 11.4 trillion won to 14.2 trillion won due to deposits from semiconductor companies. MMFs increased by 12.6 trillion won, driven by the inflow of corporate surplus funds due to improved corporate performance.
By economic entity, the money supply for non-financial corporations increased by 33.9 trillion won, a significant rise from the previous month's increase of 20.4 trillion won. The money supply for non-financial corporations has now increased for ten consecutive months since October of last year.
Other financial institutions (+1 trillion won) and households and non-profit organizations (+300 billion won) both turned from declines to increases compared to the previous month. Notably, the money supply for households and non-profit organizations returned to growth for the first time in four months since April. In contrast, other sectors saw a decrease of 35 trillion won.
The narrow money supply M1, which includes cash, demand deposits, and savings deposits, stood at 1,357.6 trillion won, a decrease of 1.1% from the previous month. The liquidity of financial institutions (Lf) averaged 6,386.4 trillion won, an increase of 0.6% from the previous month, while the broad liquidity (L) was recorded at 8,094.3 trillion won, a 0.2% increase from the end of the previous month.
* This article has been translated by AI.
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