Market Liquidity Increased by 11.2 Trillion in October... Rising for 5 Consecutive Months

[Image source=Yonhap News]

Market liquidity funds increased by more than 11 trillion won in one month, continuing the upward trend for five consecutive months. This was due to a large inflow of corporate and household funds into demand deposit-type savings accounts and other deposits.

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 October was 3,858.8 trillion won, an increase of 11.2 trillion won compared to the previous month.

This marks the fifth consecutive month of growth following June (3,795 trillion won), July (3,820.8 trillion won), August (3,829.6 trillion won), and September (3,847.6 trillion won).

However, the growth rate narrowed to 0.3%, down from 0.5% in September.

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

By product, demand deposit-type savings accounts, market-type products, and money trusts increased by 12 trillion won, 4.7 trillion won, and 1.8 trillion won, respectively.

Demand deposit-type savings accounts saw a significant increase compared to the previous month (3.6 trillion won) due to the inflow of settlement funds for corporate tax and value-added tax payments and funds waiting for investment.

Market-type products increased mainly in negotiable certificates of deposit (CD) as banks continued efforts to raise funds following the maturity of time deposits, and money trusts increased mainly in demand deposit-type trusts.

On the other hand, time deposits and installment savings decreased by 5.9 trillion won. Although the household sector increased due to rising deposit interest rates, the balance held by securities companies and other financial institutions declined, resulting in a month-on-month decrease.

By economic agents, households and non-profit organizations increased by 3.3 trillion won, mainly in time deposits, installment savings, and beneficiary certificates, while corporations increased by 2.9 trillion won, mainly in demand deposit-type savings accounts and market-type products.

Other sectors decreased by 6 trillion won, and other financial institutions also decreased by 2.2 trillion won, mainly in money market funds (MMF) and time deposits.

The narrow money supply (M1) averaged 1,197.4 trillion won (seasonally adjusted series), increasing by 12.5 trillion won compared to the previous month, marking a reversal to growth. However, compared to the same month last year (original series), it decreased by 7.2%, continuing a decline for 14 consecutive months.