In December Last Year, Market Money Supply Increased by 23.8 Trillion Won... Highest in 13 Years and 1 Month

Exports Increase by 13.2% Compared to Last Year Due to Disaster Relief Funds and Other Factors

[Asia Economy Reporter Seo So-jeong] The amount of money circulating in the market increased by 23.8 trillion won in December last year. This rise in the money supply was due to an increase in export settlement funds and the impact of disaster relief payments. The year-on-year growth rate was 13.2%, the highest level in 13 years and 1 month since November 2008 (14.0%).

On the 17th, the Bank of Korea announced in its 'Monetary and Liquidity in December 2021' report that the broad money supply (M2, average balance basis) stood at 3613 trillion won as of December, up 23.8 trillion won (0.7%) from the previous month. The year-on-year growth rate was 13.2%, maintaining double-digit growth since January this year.

Broad money (M2) includes narrow money (M1), which consists of cash, demand deposits, and savings deposits with check-writing privileges, plus money market funds (MMF), time deposits and certificates of deposit under two years, financial bonds, money trusts, beneficiary certificates, negotiable certificates of deposit (CD), repurchase agreements (RP), and commercial paper.

The Bank of Korea stated, "The M2 growth rate has continued to rise since September 2017, and the growth rate in December 2021 increased compared to the previous month."

By financial product, time deposits increased by 20.5 trillion won, money trusts by 5.3 trillion won, and market-type products by 4.5 trillion won.

Conversely, demand deposits and MMFs decreased by 5.7 trillion won and 4.1 trillion won, respectively.

By economic agent, corporations increased by 14.6 trillion won, households and non-profit organizations by 14.4 trillion won, and other financial institutions by 0.9 trillion won.

A Bank of Korea official explained, "The money supply for households and non-profit organizations increased due to the sale of alternative assets such as stocks and the effect of disaster relief payments, despite a shift to a decline in household loans. Corporate money supply also increased due to the inflow of settlement funds from export growth."

Narrow money (M1), which includes only cash, demand deposits, and checking accounts, stood at 1341.9 trillion won in December last year, down 0.6% from November.

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