Money Supply Rises by 56 Trillion Won in August... Growth in Bond-Type Beneficiary Certificates Continues

Bank of Korea Releases August Money and Liquidity Data
M2 Reaches 4,400.2 Trillion Won, Marking Fifth Consecutive Month of Growth

In August, the amount of money in circulation increased by nearly 56 trillion won, marking the fifth consecutive month of growth in the money supply. The rise in beneficiary certificates, particularly those based on bonds, continued to drive this trend.

According to the Bank of Korea on October 15, the seasonally adjusted average balance of broad money (M2) in August was 4,400.2 trillion won, up 55.8 trillion won (1.3%) from the previous month. M2 has been on the rise for five consecutive months since April. M2 is a broad measure of the money supply, which includes cash, demand deposits, and transferable savings deposits (M1), as well as money market funds (MMFs), time deposits and installment savings with maturities of less than two years, beneficiary certificates, and repurchase agreements (RPs).

By financial product, beneficiary certificates increased by 12.8 trillion won, transferable savings deposits by 14.3 trillion won, and time and installment savings by 8.3 trillion won compared to the previous month, leading the overall growth. A Bank of Korea official explained, "The increase in beneficiary certificates was mainly driven by bond-type products. Transferable savings deposits rose due to temporary deposits of local government fiscal funds and the inflow of idle investment funds, while time and installment savings grew as some banks attracted deposits to manage their loan-to-deposit ratios."

An employee is holding a 50,000 won bill at the Hana Bank Counterfeit Response Center in Jung-gu, Seoul. Photo by Yonhap News

By economic sector, companies increased their holdings by 25.9 trillion won, mainly through beneficiary certificates and time and installment savings. Households and nonprofit organizations saw an increase of 16.9 trillion won, primarily in beneficiary certificates and transferable savings deposits. Other financial institutions increased by 10.4 trillion won, focusing on time and installment savings, while other sectors recorded a 4.6 trillion won increase, mainly in time and installment savings and transferable savings deposits.

The average balance of M1 stood at 1,312.8 trillion won, up 1.5% from the previous month.