April Money Supply Down by 13.1 Trillion Won... Time Deposits and Savings Decrease for the First Time in 2 Years and 5 Months

Market Money Supply Declines for Two Consecutive Months

In April, the money supply decreased by 13.1 trillion won compared to the previous month. The money supply declined for the second consecutive month due to corporate value-added tax payments and dividend payouts.

According to the 'Money and Liquidity' statistics released by the Bank of Korea on the 14th, the average broad money supply (M2 basis) in April was 3,797.3 trillion won, down 13.1 trillion won (0.3%) from the previous month.

The money supply, which had increased in February due to the recovery of demand for stock and bond investments, continued to decline in March and April.

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, beneficiary certificates (+3.2 trillion won) and checking deposits (+1.1 trillion won) increased, while money trusts (-600 billion won), demand deposits (-5.3 trillion won), and time deposits/installment savings (-3.4 trillion won) decreased.

Money trusts and demand deposits declined due to increased funding demand from corporations and other sectors. This was influenced by companies making value-added tax payments and dividend distributions.

Time deposits and installment savings decreased as households increased their safe bank deposits, but corporations and others saw a rise in settlement fund demand. This marks the first time in two years and five months since November 2020 (-300 billion won) that time deposits/installment savings have turned to a decrease.

On the other hand, beneficiary certificates increased mainly in stock-type funds as stock prices rose.

By economic agents, households and non-profit organizations increased bank time deposits/installment savings by 20.8 trillion won, but corporations (-14.3 trillion won), other financial institutions (-11.4 trillion won), and other sectors (-8.1 trillion won) saw declines.

The narrow money supply M1, which includes only cash, demand deposits, and checking deposits, was 1,188.1 trillion won in April, down 3.3 trillion won from the previous month due to a decrease in demand deposits. This marks the 11th consecutive month of decline since June last year.