Money Supply Increases for 7 Consecutive Months... Up 29.7 Trillion in December

The money supply in circulation increased for the seventh consecutive month as funds continued to flow into funds and investment standby funds grew.

According to the 'December 2023 Money and Liquidity' report released by the Bank of Korea on the 16th, the broad money supply (M2) (seasonally adjusted series, average balance basis) in December last year was 3,925.4 trillion won, an increase of 29.7 trillion won from the previous month. The growth rate was 0.8%, slightly down from 0.9% in the previous month.

M2 is an indicator used to represent the amount of money circulating in the market. M2 includes narrow money (M1), which consists of cash, demand deposits, and savings deposits with check-writing privileges, as well as financial products such as money market funds (MMF), time deposits under two years, beneficiary certificates, negotiable certificates of deposit (CD), and repurchase agreements (RP).

By product, beneficiary certificates (+12.7 trillion won), savings deposits with check-writing privileges (+11.4 trillion won), and demand deposits (+10.8 trillion won) increased. On the other hand, MMFs (-4.5 trillion won) and time deposits (-3.4 trillion won) decreased.

A Bank of Korea official explained, "Beneficiary certificates increased as the growth trend of equity, bond, and derivative funds continued. Savings deposits with check-writing privileges and demand deposits increased due to efforts by some banks to attract corporate funds for regulatory ratio management and the inflow of investment standby funds following the decline in time deposit interest rates."

In the case of MMFs, the amount decreased as government surplus funds were withdrawn, and time deposits decreased due to withdrawals of local government fiscal execution funds and increased year-end corporate cash demand.

By economic agents, households and non-profit organizations (+12.6 trillion won) increased by 12.6 trillion won, mainly in savings deposits with check-writing privileges and beneficiary certificates. The other sectors increased by 9.4 trillion won, centered on beneficiary certificates, and other financial institutions increased by 7.1 trillion won, mainly in savings deposits with check-writing privileges and beneficiary certificates.

On the other hand, corporations decreased by 5.9 trillion won, mainly due to a decline in market-type products and time deposits.

Meanwhile, narrow money (M1) (seasonally adjusted series, average balance basis) was 1,225.4 trillion won, an increase of 23.7 trillion won from the previous month. The growth rate was 2% compared to the previous month.