Bank of Korea Releases July Money Supply and Liquidity Data
M2 at 4,344.3 Trillion Won...Fourth Consecutive Month of Growth
In July, the amount of money in circulation increased by nearly 36 trillion won, marking the fourth consecutive month of growth in the money supply. This was largely driven by a rise in investment securities, particularly equity-type securities, amid an upward trend in the stock market.
According to the Bank of Korea on September 16, the seasonally adjusted average balance of broad money (M2) stood at 4,344.3 trillion won in July, up 35.9 trillion won (0.8%) from the previous month. M2 has increased for four consecutive months since April. M2 is a broad monetary indicator that includes narrow money (M1)-such as cash, demand deposits, and passbook savings accounts-along with money market funds (MMF), time deposits and installment savings with maturities under two years, investment securities, and repurchase agreements (RP).
By financial product, investment securities increased by 15.3 trillion won, passbook savings accounts by 7.1 trillion won, and demand deposits by 6.9 trillion won compared to the previous month, driving the overall growth. A Bank of Korea official explained, "Investment securities rose mainly due to equity-type securities amid the stock market's upward trend," adding, "Passbook savings accounts and demand deposits increased as funds were deposited for value-added tax payments and as idle funds awaiting investment flowed in." In contrast, market-type products decreased by 2.6 trillion won. This decline continued as deposit-taking institutions' funding needs diminished.
By economic entity, other financial institutions saw an increase of 17.2 trillion won, mainly in investment securities and other liquid assets. Households and nonprofit organizations increased by 14.5 trillion won, primarily in passbook savings accounts and investment securities, while other sectors saw a 2.9 trillion won increase, mostly in investment securities. Corporations also increased by 1.7 trillion won, mainly in passbook savings accounts.
The average balance of M1 stood at 1,292.9 trillion won, up 1.2% from the previous month.
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