Money supply up 1.1% in November in a context of increased savings

(Yonhap)

South Korea’s money supply increased in November as savings increased in part due to higher interest rates, central bank data showed on Wednesday.

The country’s M2, a key indicator of money supply, averaged 3.589 trillion won ($3.01 trillion) in November, up 1.1 percent, or 39.4 trillion won, compared to the previous month, according to preliminary data from the Bank of Korea. (BOK).

The growth rate was the same as that announced in October.

Money supply jumped 12.9% from a year earlier, the fastest since the 13.1% expansion recorded in December 2008, the data showed.

Money supply growth in November was partly explained by the increase in deposits with financial institutions, stimulated by the rise in interest rates.

Term deposits, among others, jumped 13.9 trillion won in a month in November, the data showed.

Savings rates have risen alongside the central bank’s policy rate hikes in recent months as it seeks to tighten its accommodative monetary policy aimed at supporting the pandemic-hit economy.

M2 is a measure of money supply that counts cash, demand deposits, and other readily convertible financial instruments. (Yonhap)

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