Money Supply Increases by 18.5 Trillion Won... Driven by Expanded Stock Market Transactions

Bank of Korea Releases "Monetary and Liquidity Trends for March 2026"

Former M2 Rises 9.3% Year-on-Year on Surge in Beneficiary Certificates

In March, the amount of money in circulation increased by more than 18 trillion won, marking a fourth consecutive month of growth in the money supply.

An employee is organizing 50,000-won bills at the Counterfeit Response Center of Hana Bank's headquarters in Euljiro, Jung-gu, Seoul. Photo by Yonhap News Agency

According to the "Monetary and Liquidity Trends for March 2026" released by the Bank of Korea on May 13, the seasonally adjusted average balance of broad money (M2) in March was 4,132.1 trillion won, up 18.5 trillion won from the previous month. This marks the fourth consecutive month of increase since December of last year. On a non-seasonally adjusted basis, this represents a 5.6% increase compared to the same month last year. M2 is a broad monetary indicator that includes cash, demand deposits, and transferable savings deposits (M1), as well as money market funds (MMF), time deposits and installment savings with maturities of less than two years, certificates of deposit (CD), and repurchase agreements (RP).

The average balance of the former M2, including beneficiary certificates, increased by 0.6% from the previous month and by 9.3% compared to the same month last year. Beneficiary certificates surged by 47.3% year-on-year, which is analyzed to have contributed 4.5 percentage points to the growth of the former M2.

By product, money market funds (MMF) increased by 12.4 trillion won. A Bank of Korea official explained that this was influenced by the expansion of short-term fund management, such as an increase in short-term idle funds related to transaction taxes due to the expansion of stock market transactions by certain other financial institutions. Transferable savings deposits also increased by 6.5 trillion won, primarily due to the inflow of corporate funds for dividend payments.

By economic sector, non-financial corporations increased by 34.9 trillion won, other financial institutions by 1.6 trillion won, and other sectors—including social security organizations and local governments—by 200 billion won, while households and nonprofit organizations decreased by 13.1 trillion won.

The seasonally adjusted average balance of M1 was 1,368.7 trillion won, a 0.7% increase from the previous month.

Financial institution liquidity (Lf, average balance) stood at 6,194.1 trillion won, up 0.5% from the previous month, while broad liquidity (L, end-of-month balance) was 7,820.5 trillion won, down 0.4% from the end of the previous month. The Lf category includes not only M2, but also long-term financial products with maturities of two years or more and financial products issued by non-deposit-taking institutions. The L category encompasses Lf as well as other financial institution products, government bonds, local government bonds, corporate bonds, and commercial paper.

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