Money supply increased by 23 trillion won in December... Foreign currency deposits up, year-end effect
Bank of Korea providedIn December of last year, the money supply in circulation increased by more than 23 trillion won, marking a rebound within a month.
According to the "Monetary and Liquidity" statistics released by the Bank of Korea on the 13th, the average broad money supply (M2 basis, average balance) in December last year was 4,807 trillion won, an increase of 0.6% (23.4 trillion won) from the previous month.
M2 decreased by 20 billion won compared to the previous month in November last year, but rebounded within a month.
In the broad sense, the money supply indicator M2 includes cash, demand deposits, and savings deposits (all of which are M1), as well as short-term financial products that can be quickly converted into cash, such as money market funds (MMF), time deposits and savings accounts with a term of less than two years, certificates of deposit (CD), and repurchase agreements (RP).
Other financial products with foreign currency deposits of less than 2 years and demand savings deposits increased by 10.9 trillion won and 7.3 trillion won, respectively.
A central bank official explained, "Other financial products have mainly increased through foreign currency deposits of corporations and households (such as dollar deposits in banks), and the increase in demand deposit savings is estimated to have been driven by temporary corporate fund deposits for year-end financial ratio management, bonuses, and inflows of household surplus funds."
In terms of economic entities, liquidity increased by 12.9 trillion won from companies, 10.4 trillion won from households and non-profit organizations, and 2.3 trillion won from other financial institutions.
Other financial institutions increased by 2.3 trillion won, centered on the growth of demand deposits. Other sectors decreased by about 5.4 trillion won, mainly due to time deposits of less than two years. The impact of withdrawals of local government fiscal execution funds at year-end was significant.
Narrowly defined money supply M1, which includes only cash, demand deposits, and savings accounts (1,342 trillion 900 billion won), also increased by 0.6% (8 trillion 600 billion won) compared to the previous month.
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