Market Money Supply Reaches 3,053.9 Trillion Won... Record High

Bank of Korea Financial Statistics Team: "Corporate Loans Increase Due to Liquidity Supply"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The money supply in the market has reached an all-time high. This is believed to be due to increased loans to businesses and households amid the novel coronavirus disease (COVID-19) pandemic.

According to the Bank of Korea on the 15th, the broad money supply (M2) as of May was recorded at 3,053.9 trillion won. This is an increase of 35.3 trillion won compared to the end of April (3,018.6 trillion won).

M2 includes M1 components such as cash, demand deposits, and checking deposits, as well as money market funds (MMF), time deposits and savings certificates under two years, 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 converted into cash. Long-term financial products with low liquidity are excluded.

During May alone, M2 increased by 35.3 trillion won (1.2%), marking the highest increase since the system was established in January 1986. The flood of funds in the market is due to a sharp rise in corporate loans amid economic downturn. A Bank of Korea Financial Statistics Team official explained, "Liquidity has been widely released into the market, leading to an increase in corporate loans."

By economic agents, increases were 14.6 trillion won for corporations and other financial institutions, 7 trillion won for households and non-profit organizations, and 2.9 trillion won for other sectors.

By financial product, demand savings deposits increased by 10.4 trillion won, demand deposits by 15.7 trillion won, and money market funds (MMF) by 10.9 trillion won. On the other hand, time deposits under two years decreased by 7.9 trillion won.