Regular Savings Instead of Risk Assets... Money Supply Increased by 8.5 Trillion Won in April

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] As volatility in the financial market increased, funds moved to safe assets such as time deposits and savings, resulting in an increase of approximately 8.5 trillion KRW in the money supply in April.

According to the 'Money and Liquidity' statistics released by the Bank of Korea on the 15th, the average broad money supply (M2 basis) in April was 3,667.1 trillion KRW, up 8.5 trillion KRW (0.2%) from the previous month.

The broad money supply indicator M2 includes cash, demand deposits, and checking deposits (all M1), as well as money market funds (MMF), time deposits under two years, savings deposits, beneficiary certificates, negotiable certificates of deposit (CD), repurchase agreements (RP), financial bonds under two years, and money trusts under two years?short-term financial products that can be quickly converted into cash.

By product, demand deposits increased by 7.6 trillion KRW and time deposits and savings by 4.2 trillion KRW, while money trusts decreased by 4.4 trillion KRW and MMFs by 2.7 trillion KRW due to the rise in market interest rates.

The Bank of Korea explained, "As global financial market volatility expands and risk-asset avoidance sentiment strengthens, funds continue to move into safe assets such as time deposits and savings."

By economic agents, households and non-profit organizations increased significantly by 16.2 trillion KRW, mainly in time deposits and demand deposits, whereas corporations decreased by 7.7 trillion KRW despite a large increase in loans, due to dividend payments and increased demand for working capital. Other financial institutions decreased by 12.2 trillion KRW as well, temporarily increasing withdrawals of matured time deposits mainly at securities companies.

The year-on-year growth rate of M2 (based on the original series average balance) was 9.4%, down from 10.8% in the previous month.

The narrow money supply M1, which includes only cash, demand deposits, and checking deposits, was 1,367.2 trillion KRW, up 0.6% from the previous month. The year-on-year growth rate was 9.5%, continuing a downward trend since February last year (26.0%).

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