South Korea’s money supply hits highest rate of increase in 13 years

Seoul [South Korea], Jan 13 (ANI/Global Economic): As individual investors sold off risky assets such as stocks due to rising base interest rates, South Korea’s money supply topped 39 trillion won, reaching the highest rate. The rate of increase is the highest in 12 years and 11 months. According to the Bank of Korea’s report, “Money and Liquidity in November 2021”, released on the 12th, the money supply in the market (based on M2) increased by 39.4 trillion won (1.1%) by month-over-month to reach 3,589.1 trillion won in November 2021. Compared to a year ago, it was up 12.9% from the previous month (12.4%).

This is the highest level in 12 years and 11 months since December 2008 (13.1%). M2 is a measure of money supply which includes money market funds (MMF), regular deposits and installment savings less than 2 years old, and beneficiary certificate in addition to M1 (cash, check deposits and easily convertible currency). The money supply in the market first surpassed 3 trillion won in April last year and has continued to peak every month.

In November last year, the money supply increased in both households and businesses. By economic entity, the money supply of households and nonprofit organizations rose from 17.2 trillion won to 1.734.7 trillion won, up 1.0 percent from the previous month. Jung Jin-woo, deputy director of the financial statistics team at the Bank of Korea’s Bureau of Economic Statistics, said, “Although the rate of increase in housing-related loans has been slowed down due to strict regulations loans, money invested in risky assets such as stocks is transferred to deposits as the base rate rises.”

Deputy Director Jung also said, “The government disaster relief fund also seems to be used for financial obligations or regular deposits. In November last year, retail investors sold 2.4 trillion won net in the securities market, while deposits fell only 740 billion won. Mortgage loans, including Jeonse loans, rose 2.4 trillion won in November, down from the previous month (4.7 trillion won). Money supply in the corporate sector increased by 14.5 trillion won (1.4 percent) from the previous month to 1.058.2 trillion won. On this, Deputy Director Jung said, “It is because direct investment in assets such as raising paid-in capital has developed with continued financial support for small and medium-sized enterprises. (ANI/Global Economy)

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