South Korean money supply hits record high on record-low rates

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Money supply in South Korea hit a record high in November last year amid the record-low policy rate, central bank data showed on Thursday.

The M2, dubbed broad money, reached a new high of 2,406.4 trillion won (2.03 trillion U.S. dollars) in November, up 7.3 percent from a year earlier, according to the Bank of Korea (BOK). It was the fastest gain in eight months.

The broad money continued to increase as the BOK cut its benchmark interest rate from 3.25 percent in July 2014 to an all-time low of 1.25 percent in June last year.

The M2 growth rate slowed from 8.3 percent in February to 6.7 percent in May, but it stayed around 6 percent since then before rebounding in November.

The M1, also called narrow money, jumped 12.5 percent in November compared with a year earlier.

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

Liquidity of financial institutions, called Lf, advanced 8.2 percent in November from a year ago. The on-year rise of liquidity aggregate, the broadest measure of money supply, was 8.0 percent in the month.

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. Enditem

Source: Xinhua/NewsGhana.com.gh

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