BUSINESS S.Korea's money supply keeps growing on record-low policy rate

BUSINESS

S.Korea's money supply keeps growing on record-low policy rate

Xinhua

16:52, August 13, 2020

SEOUL, Aug. 13 (Xinhua) -- South Korea's money supply kept growing on the back of a record-low policy rate, central bank data showed Thursday.

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File photo: CFP

The M2, called broad money, amounted to 3,077.1 trillion won (2.6 trillion U.S. dollars) in June, up 9.9 percent from a year earlier, according to the Bank of Korea (BOK).

The continued increase came as the BOK lowered its target rate by 25 basis points to an all-time low of 0.50 percent in May after slashing it by 50 basis points in March.

The M1, dubbed narrow money, jumped 21.3 percent in June from a year ago.

The M1 refers to currency in circulation, demand deposit, transferable savings deposit equivalent to cash. The M2 adds money market funds, time deposit and financial products that mature in less than two years to M1.

The liquidity on financial institutions, called Lf, gained 8.6 percent in the cited month. The year-over-year growth of liquidity aggregate, the broadest measure of money supply, was 8.0 percent.

The Lf includes financial products with a maturity of more than two years and liquidity at insurers and brokerages along with M2. The liquidity aggregate adds state and corporate bonds to the Lf. 

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