May Money Supply Increased by About 30 Trillion Won in One Month... Time Deposits and Savings Up

(Data provided by Bank of Korea)

As households increased their regular savings and time deposits due to a preference for safe assets, the money supply in circulation grew by nearly 30 trillion won in just one month.

According to the May Money and Liquidity report released by the Bank of Korea on the 12th, the broad money supply (M2, seasonally adjusted, average balance) reached 3,696.9 trillion won this month, up 0.8% (29.8 trillion won) from the previous month. Compared to a year ago, it increased by 9.3%.

The broad money supply indicator M2 includes not only cash, demand deposits, and checking accounts that can be used like cash, but also short-term financial products that can be easily converted into cash, such as money market funds (MMF), time deposits under two years, beneficiary certificates, certificates of deposit (CD), and repurchase agreements (RP).

After M2 money supply decreased by 0.1% in March for the first time in three and a half years since September 2018, it rose again by 0.2% in April and continued its upward trend in May. However, the year-on-year growth rate was lower than the previous month’s 9.4%.

By financial product, regular savings and time deposits increased by 21 trillion won, while demand deposits (7.4 trillion won) and financial bonds (3 trillion won) also rose. On the other hand, money market funds (MMF, -8.1 trillion won) and passbook savings accounts (-2.1 trillion won) decreased.

Loans related to financial support and working capital demand increased, with corporate loans rising by 13.7 trillion won, and household and nonprofit organization loans increasing by 12.1 trillion won due to rising market interest rates and a preference for safe assets, mainly in regular savings and time deposits.

Additionally, as funds related to small business loss compensation flowed into local governments, the other sector also increased by 7.9 trillion won, mainly in regular savings and time deposits.

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