Bank of Korea's 'Unlimited Money Supply' Attracts 5.25 Trillion Won on First Day (Update)

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] On the first day of the Bank of Korea's 'unlimited money supply' move, 5.25 trillion won was attracted in repurchase agreement (RP) purchases.

On the 2nd, the Bank of Korea announced that it conducted an RP purchase auction targeting banks and securities firms to expand liquidity supply in the market, resulting in bids totaling 5.25 trillion won, all of which were accepted.

The Bank of Korea's Monetary Policy Committee decided on the 26th of last month to introduce a weekly regular RP purchase system for three months that supplies the full amount of market fund demand without limit at a certain interest rate level. This is an unprecedented measure not taken even during the 1997 foreign exchange crisis or the 2008 financial crisis. Since it is not significantly different from the quantitative easing (QE) implemented by major central banks such as the United States, it has been evaluated as a 'Korean-style quantitative easing.'

The RP purchase offering rate this time was 0.78%. A Bank of Korea official stated, "It was decided by considering various yields together, including the 91-day Monetary Stabilization Bond average yield from three companies, the final bid yield, the average interest rate of the previous RP purchases, and securities firms' RP funding rates."

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