Money Supply Drops by 1.9 Trillion Won in November, First Decline in Eight Months

Bank of Korea, November 2025 Money Supply and Liquidity
New M2 (excluding beneficiary certificates)... Old M2 up 0.6%

In November of last year, the amount of money in circulation decreased by nearly 2 trillion won, marking the first decline in the money supply in eight months.

An employee is organizing 50,000 won bills at the Counterfeit Response Center of Hana Bank Headquarters in Euljiro, Jung-gu, Seoul. Photo by Yonhap News

According to the Bank of Korea on January 14, the seasonally adjusted average balance of broad money (M2) in November 2025 was 4,057.5 trillion won, a decrease of 1.9 trillion won (-0.0%) from the previous month's 4,059.5 trillion won. On a non-seasonally adjusted basis, this represented a 4.8% increase compared to the same month of the previous year. M2 is a broad measure of money supply that includes narrow money (M1)-such as cash, demand deposits, and passbook savings accounts for immediate withdrawal-plus money market funds (MMF), time deposits and installment savings with maturities of less than two years, negotiable certificates of deposit (CD), and repurchase agreements (RP).

The old M2 average balance, which includes beneficiary certificates, increased by 0.6% from the previous month and by 8.4% from the same month a year earlier. Beneficiary certificates rose by 38.4% year-on-year, contributing 3.4 percentage points to the 8.4% annual growth of the old M2. Excluding beneficiary certificates, the old M2 increased by about 5.0% compared to the same month of the previous year.

By product, market-based instruments such as financial bonds with maturities of less than two years and CDs and RPs increased by 4.2 trillion won and 2.5 trillion won, respectively. A Bank of Korea official explained, "The increase was driven by funding demand for liquidity coverage ratio (LCR) management at some banks." In contrast, time deposits and installment savings with maturities of less than two years fell by 13 trillion won, mainly due to a shift of funds to the booming stock market.

By sector, non-financial corporations increased their time deposits and installment savings by 11 trillion won, while other financial institutions grew their holdings of financial bonds and money trusts by 8.7 trillion won. In contrast, households and non-profit organizations reduced their time deposits and installment savings by 12.3 trillion won, and the other sectors saw a 6.3 trillion won decrease, mainly in demand deposits.

The seasonally adjusted average balance of M1 was 1,332.4 trillion won, up 0.1% from the previous month. The average balance of financial institution liquidity (Lf) was 6,024.2 trillion won, an increase of 0.1% from the previous month, while broad liquidity (L) at the end of the month was 7,627.8 trillion won, up 0.4% from the end of the previous month. The Lf category includes not only M2, but also long-term financial products with maturities of two years or more, as well as financial products issued by non-deposit-taking institutions. The L category encompasses Lf, other financial institution products, government bonds, local government bonds, corporate bonds, and commercial paper.