February Broad Money Supply (M2) Average Balance Reaches 4,229.5 Trillion Won
Up 0.6% from Previous Month... 21 Consecutive Months of Growth
The money supply in circulation has increased for 21 consecutive months. With expectations of falling interest rates, depositors have proactively placed funds, leading to an increase in time deposits and savings deposits.
According to the Bank of Korea on the 15th, the seasonally adjusted broad money supply (M2) average balance in February was 4,229.5 trillion won, up 25.7 trillion won (0.6%) from the previous month. M2 has been on an upward trend for 21 consecutive months since June 2023. M2 is a broad monetary indicator that includes narrow money (M1) such as cash, demand deposits, and passbook savings, as well as money market funds (MMF), time deposits under two years, beneficiary certificates, and repurchase agreements (RP).
By financial product, time deposits and money trusts increased by 8.5 trillion won and 4.9 trillion won respectively compared to the previous month. Time deposits and savings deposits returned to an increasing trend after three months. A Bank of Korea official explained, "Time deposits and savings deposits increased due to depositors’ proactive fund placement amid expectations of falling interest rates," adding, "Money trusts increased due to expanded inflows of asset-backed commercial paper (ABCP) issuance funds related to time deposits."
On the other hand, market-type products and financial bonds decreased by 3.5 trillion won and 2.7 trillion won respectively. The Bank of Korea explained that this was due to deposit-taking institutions focusing on fund procurement centered on deposits and savings deposits.
By sector, the money supply of households and non-profit organizations increased by 3.6 trillion won mainly in time deposits, savings deposits, and other beneficiary certificates. Corporations increased by 4 trillion won mainly in other monetary products and MMFs. Other financial institutions increased by 17.1 trillion won mainly in time deposits and money trusts. Conversely, other sectors decreased by 1.7 trillion won mainly in MMFs and time deposits.
The average balance of narrow money (M1) was 1,282.1 trillion won, increasing by 4.5 trillion won (0.4%) from the previous month, mainly due to cash currency and demand deposits.
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