In July, South Korea's money supply increased by nearly 13 trillion won, marking the ninth consecutive month of growth, driven by deposits from semiconductor companies and an increase in time deposits.
According to the Bank of Korea's 'Monetary and Liquidity' statistics released on September 15, the average broad money supply (M2) for July was 4,225.6 trillion won, up 12.7 trillion won (0.3%) from the previous month. This marks the largest increase since November of last year. The M2 growth rate was the lowest since February (0.0%).
The M2 money supply, which includes cash, demand deposits, and savings deposits, also encompasses money market funds (MMFs), time deposits of less than two years, certificates of deposit (CDs), repurchase agreements (RPs), financial bonds of less than two years, and short-term financial products that can be quickly converted to cash.
Among these, time deposits of less than two years saw an increase of 27.3 trillion won in just one month, the largest rise since December 2022.
The influx of corporate surplus funds and the transfer of some funds from demand deposits to time deposits for investment in derivative markets contributed to the increase in the money supply.
Time deposits of less than two years also rose by 11.4 trillion won due to deposits from semiconductor companies, marking the largest increase since January 2022.
Conversely, demand deposits decreased by 27 trillion won, the largest drop since statistics began in October 2003. This decline is attributed to a reduction in corporate holdings due to value-added tax payments and a decrease in margins for derivative trading.
By economic sector, non-financial corporations (+20.6 trillion won) and other sectors (+6.3 trillion won) saw increases, while households and non-profit organizations experienced a decline of 11.6 trillion won.
The narrow measure of money supply, M1, which includes cash, demand deposits, and savings deposits, stood at 1,372.5 trillion won, down 2.2% (30.4 trillion won) from the previous month. This is the first decline since April of last year (-0.03%).
* This article has been translated by AI.
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