Market Funds Flock to Fixed Deposits and Installment Savings, Increasing Money Supply for 12 Consecutive Months

 

 

 

According to the "Monetary and Liquidity" statistics released by the Bank of Korea, the average broad money supply (M2) for May this year was 4,014.1 trillion won, an increase of about 9 trillion won compared to the previous month.

This marks the twelfth consecutive month of increase since June last year.

The increase in the money supply is analyzed to be the result of funds flowing into fixed deposits, installment savings, and beneficiary certificates.

During the month of May, fixed deposits and installment savings increased by 9.3 trillion won, beneficiary certificates by 7.9 trillion won, and financial bonds by 5.9 trillion won, respectively.

On the other hand, 7.7 trillion won, 7.2 trillion won, and 6.3 trillion won were withdrawn from money trusts, demand deposits, and savings deposits, respectively.

A Bank of Korea official explained, "The significant increase in fixed deposits and installment savings is due to the perception that interest rates have peaked and the efforts of banks to attract funds."

In the case of beneficiary certificates, the increase was centered on bond-type and stock-type funds, and the increase in financial bonds was due to the rise in bank loan assets, leading to higher issuance volumes.

Meanwhile, the decrease in money trusts was attributed to the maturity of some trust funds, which were re-deposited into long-term trust products.

Funds in demand deposits and savings deposits were also found to have moved to fixed deposits, installment savings, and beneficiary certificates.

By economic entity, liquidity increased by 13.5 trillion won in households and non-profit organizations, and by 5.6 trillion won in other financial institutions.

Conversely, liquidity decreased by 7.2 trillion won in other sectors and by 2.4 trillion won in corporations.

The narrow money supply (M1), which includes only cash, demand deposits, and savings deposits, decreased by 1.1% (13.2 trillion won) compared to the previous month, recording 1,221.6 trillion won.

This decrease was due to the movement of funds centered on demand deposits and savings deposits.

This increase in the money supply reflects the phenomenon of funds flocking to deposit products in conjunction with the interest rate hike trend, and the changes in the financial market and the investment tendencies of economic entities also play important roles.

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Market Funds Flock to Fixed Deposits and Installment Savings, Increasing Money Supply for 12 Consecutive Months