Endless 'Liquidity Party'... Money Supply Surpasses 3444 Trillion in July

Bank of Korea Announces 'Money and Liquidity in July 2021' on the 12th
M1 Records 1,296 Trillion Won...1.1% Increase from Previous Month

[Asia Economy Reporter Jang Sehee] As liquidity expansion continues in the private sector, including corporations and households, the money supply in July reached 3,443.9 trillion won.

According to the "Money and Liquidity in July 2021" report released by the Bank of Korea on the 12th, the broad money supply (M2, seasonally adjusted, average balance basis), which refers to the money circulating in the market, was 3,443.9 trillion won in July, an increase of 32.1 trillion won (1.1%) from the previous month (3,411.8 trillion won).

M2 is a broad monetary indicator that includes narrow money (M1) such as cash, demand deposits, and savings deposits with check-writing privileges, as well as financial products like money market funds (MMF), time deposits under two years, and beneficiary certificates. It represents liquid funds that can be converted into cash at any time.

The year-on-year growth rate of M2 (based on the original series average balance) was 11.4%, up from 10.9% in the previous month. The year-on-year growth rate of M2 showed the highest increase since April (11.4%) and had slightly declined in June (10.9%).

By product, savings deposits with check-writing privileges increased significantly by 9.7 trillion won. Time deposits and installment savings under two years and financial bonds under two years also increased by 9.5 trillion won and 4.1 trillion won, respectively.

The money supply increased across all economic agents, including corporations and households. Corporations saw an increase of 11.1 trillion won, households and non-profit organizations increased by 8.2 trillion won, and other financial institutions also rose by 7.9 trillion won.

The short-term money indicator M1 (narrow money) was 1,296 trillion won, up 1.1% from the previous month. The growth rate was higher than that of M2. M1 refers to funds that can be converted into cash at any time, such as demand deposits and savings deposits with check-writing privileges at banks, and these funds tend to move easily in pursuit of higher returns.

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