South Korea's money supply rose by about 18 trillion won in March from the previous month, driven largely by an increase in money market funds (MMFs).
According to the Bank of Korea's "Money and Liquidity" statistics released on the 13th, the average balance of broad money (M2) in March stood at 4,132.1 trillion won, up 0.4 percent (18.5 trillion won) from the previous month. After remaining flat in February compared with January, the growth rate widened in March. On a year-on-year basis, M2 rose 5.6 percent.
M2 is a broad measure of money supply that includes narrow money (M1)—cash, demand deposits, and instant-access savings deposits—plus MMFs, time deposits and installment savings with maturities of less than two years, certificates of deposit (CDs), and repurchase agreements (RPs).
The average balance of the former M2 measure, which includes beneficiary certificates such as exchange-traded funds (ETFs), rose 0.6 percent from the previous month and 9.3 percent from a year earlier.
By product, MMFs—ultra-short-term financial instruments—led the increase, rising 12.4 trillion won. The Bank of Korea explained that this reflected a rise in temporary tax-related funds held by financial institutions such as securities firms, as stock trading surged amid a rallying equity market.
Instant-access savings deposits also rose 6.5 trillion won as corporate funds flowed in for dividend payments.
By economic agent, holdings increased at non-financial corporations (+34.9 trillion won) and other financial institutions (+1.6 trillion won), but declined at households and non-profit organizations (-13.1 trillion won).
The average balance of M1 stood at 1,368.7 trillion won, up 0.7 percent from the previous month.
