May Call Volume Down 9.7 Trillion Won... Regular Savings and Time Deposits Increase Again After One Month

Market Money Supply Declines for Three Consecutive Months

In May, the money supply decreased by 9.7 trillion won compared to the previous month, marking the third consecutive month of decline.

According to the 'Money and Liquidity' statistics released by the Bank of Korea on the 14th, the average broad money supply (M2 basis) in May was 3,785.4 trillion won, down 9.7 trillion won (0.3%) from the previous month.

50,000 won bill (Photo by Yonhap News)

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

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 (+3.4 trillion won) and beneficiary certificates (+2.8 trillion won) increased, while money market funds (MMF, -9.5 trillion won) and checking deposits (-8.8 trillion won) decreased.

MMFs declined mainly due to corporate funds being withdrawn amid stock market instability caused by the SG Securities stock price floor incident. Checking deposits decreased as corporate demand for funds expanded.

On the other hand, time deposits and installment savings increased after a rise in deposit interest rates, turning positive within a month. Beneficiary certificates increased mainly due to other funds.

By economic agents, households and non-profit organizations increased bank time deposits and installment savings by 6.2 trillion won, and corporations increased by 5.6 trillion won, but other sectors (-4.9 trillion won) and other financial institutions (-4.8 trillion won) saw decreases.

The narrow money supply M1, which includes only cash, demand deposits, and checking deposits, was 1,179.2 trillion won in May, down 8.9 trillion won from the previous month due to a decrease in checking deposits. This marks the 12th consecutive month of decline since June last year.