Money Flows into Bank Deposits... Market Money Supply Increases for 18 Consecutive Months

Average Balance of Broad Money (M2) Reaches 4,143 Trillion Won in November
Up 0.8% from Previous Month, Marking 18 Consecutive Months of Growth

As volatility in the asset market expanded, the money supply in circulation continued to increase for the 18th consecutive month, driven by a rise in people seeking relatively safe products such as demand deposit savings accounts at banks.

According to the 'November Money and Liquidity' data released by the Bank of Korea on the 14th, the average balance of broad money (M2) in November last year was 414.3 trillion won, up 3.23 trillion won (0.8%) from the previous month. M2 has been on an upward trend for 18 consecutive months since June 2023.

M2 is a broad monetary indicator that includes narrow money (M1) such as cash, demand deposits, and demand deposit savings accounts, as well as money market funds (MMF), time deposits and savings deposits under two years, beneficiary certificates, and repurchase agreements (RP).

By financial product, demand deposit savings accounts (+1.14 trillion won compared to the previous month), beneficiary certificates (+560 billion won), financial bonds under two years (+550 billion won), and time deposits and savings deposits (+520 billion won) led the increase.

The increase in demand deposit savings accounts was due to a rise in investment-ready funds in the market amid expanded asset market volatility. A Bank of Korea official explained, "Some banks expanded parking account products that offer free withdrawals and relatively high interest rates to attract standby funds," adding, "In the case of financial bonds under two years, issuance conditions improved due to a decline in market interest rates, leading to an increase."

By economic agents, the money supply increased mainly among other financial institutions (+1.58 trillion won), households and non-profit organizations (+1.06 trillion won), and corporations (+530 billion won).

Other financial institutions increased mainly in time deposits and savings deposits and financial bonds under two years, while households and non-profit organizations increased mainly in demand deposit savings accounts.

The average balance of narrow money (M1) in November was 124.89 trillion won, increasing by 1.54 trillion won (1.2%) from the previous month, mainly due to demand deposit savings accounts.