March Transaction Volume 3,810.4 Trillion Won... Decrease of 9.1 Trillion Won

In March, the money supply decreased by 9.1 trillion won compared to the previous month.

According to the 'Money and Liquidity' statistics released by the Bank of Korea on the 12th, the average broad money supply (based on M2) in March was 3,810.4 trillion won, down 9.1 trillion won (0.2%) from the previous month.

In February, the money supply increased by nearly 13 trillion won as demand for stock and bond investments recovered, but it turned downward again.

The broad money supply indicator M2 includes cash, demand deposits, and checking deposits (all part of M1), as well as money market funds (MMF), time deposits under two years, installment savings, beneficiary certificates, 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 quickly converted into cash.

By product, time deposits and installment savings, and money market funds (MMF) increased, while money trusts and demand deposits decreased.

Time deposits and installment savings rose by 4.2 trillion won compared to the previous month. The increase narrowed from 6.8 trillion won in the previous month due to a decline in deposit interest rates. This is the smallest increase since May 2021 (4 trillion won). MMF increased by 1.5 trillion won.

On the other hand, money trusts (-8.3 trillion won) and demand deposits (-4.1 trillion won) decreased. The decrease in money trusts was the third largest on record, due to increased corporate demand for funds.

By economic agents, households and non-profit organizations increased time deposits and installment savings at non-bank deposit-taking institutions by 8.9 trillion won. The other sectors increased by 5.4 trillion won. Other financial institutions and corporations decreased by 17.8 trillion won and 11.8 trillion won, respectively.

The narrow money supply M1, which includes only cash, demand deposits, and checking deposits, was 1,191.4 trillion won in March, down 6 trillion won from the previous month due to a decrease in demand deposits. This marks a decline for 10 consecutive months since June last year.

The Bank of Korea explained, "In March, the increase in time deposits and installment savings narrowed compared to the previous month due to a decline in deposit interest rates, and money trusts showed a sharp decrease as corporate demand for funds increased, including securities firms. The movement of funds did not show clear characteristics and reflected a kind of wait-and-see stance."