Massive Money Movement Due to Speculative Assets... 'Money Move' Chasing Returns

Demand Deposits Surge by 52 Trillion Won Over 3 Months
Credit Loans Increased by 6.84 Trillion Won Last Month
Funds Shift to Cryptocurrency and IPOs

[Asia Economy Reporter Kim Hyo-jin] The phenomenon of 'money move,' where market funds shift rapidly due to the craze for cryptocurrency and public offering stocks, is intensifying. This means that as speculative and investment asset prices soar, more people are trying to actively manage their money rather than just leaving it idle.

Concerns are also rising over the side effects of 'debt investment' (borrowing to invest), as credit loans are surging, raising the risk of potential defaults.

According to the banking sector on the 4th, the demand deposit balance of the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?stood at 661.024 trillion won at the end of last month, increasing by 4.54 trillion won compared to the end of March. In February, it rose by about 29 trillion won, and in March by about 18 trillion won. This means it has surged by nearly 52 trillion won over three months.

Demand deposits include checking accounts and money market deposit accounts (MMDA), which depositors can withdraw and use at any time, often serving as standby funds for upcoming investments.

Conversely, time deposits, which are funds deposited and managed over a fixed period, are rapidly declining like an ebb tide. At the end of last month, the time deposit balance of the five major banks was 614.7991 trillion won, down by 12.8814 trillion won compared to the end of March. Considering that 2.6667 trillion won was withdrawn in March, this is an unusually steep decline.

Meanwhile, credit loans, which had slowed at the beginning of the year, have turned to a rapid increase. The credit loan balance of these banks at the end of last month was 142.2278 trillion won, up by 6.8401 trillion won from the end of March. The increase far exceeded the financial authorities' management target of 2 trillion won by more than three times.

Analysts interpret these figures as reflecting the recent trend of loosening the reins on safe assets and taking out loans to jump into investment opportunities.

A significant portion of the market liquidity is flowing into the cryptocurrency market, according to the banking sector. NH Nonghyup Bank, which partners with Bithumb and Coinone, saw new account openings increase by about 145% in the first quarter alone, while K Bank, an internet-only bank providing real-name accounts to Upbit, added approximately 1.46 million customers last month.

Domestic cryptocurrency trading volume reached about $21.63 billion (approximately 24 trillion won) on a single day, April 15, surpassing the combined domestic stock and overseas investment volume of 21 trillion won, demonstrating strong momentum.

A representative from a commercial bank explained, "Money moves such as the sharp decline in time deposits and the increase in demand deposits are driven by very powerful factors," adding, "It can also be seen as a new flow of money emerging due to the cryptocurrency craze."

[Image source=Yonhap News]

'Debt Investment' Centered on Cryptocurrency Reemerges

The enthusiasm for SK IETech (SKIET) public offering subscriptions also appears to have fueled this flow of money. On April 28-29, SKIET's public offering attracted a record-high subscription deposit of 80.9017 trillion won, while credit loans at the five major banks increased by about 5.54 trillion won over those two days?equivalent to 80% of the total increase in April.

Professor Sung Tae-yoon of Yonsei University's Department of Economics emphasized the need for moderation, stating, "Among those borrowing credit loans to invest, low-credit borrowers are highly vulnerable to interest rate hikes, so the market could become unstable due to upward pressure on interest rates."

This content was produced with the assistance of AI translation services.