S. Korea’s money supply grows at fastest rate in more than 4 yrs amid virus outbreak

2020.05.13 14:08:03

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South Korea’s money supply surged by the fastest pace in more than four years in March as companies hoarded cash against the fallouts from coronavirus outbreak, data showed Wednesday.

According to data released by the Bank of Korea on Wednesday, the country’s M2, a measure of money supply, gained 8.4 percent in March from a year ago. It is the highest growth since 8.8 percent in October, 2015. Money supply has been growing over 8 percent since February, following the outbreak in January.

M2 includes M1 such as cash, demand deposits, and money market deposits, as well as short-term financial products like two year or less deposits and installment savings that can be easily converted into cash when giving up interest earnings.

From a month ago, M2 increased 0.9 percent in March, down 0.1 percentage points from 1 percent on-month growth in February.

The sharp growth came mainly on companies whose money supply increased 30.4 trillion won in March from a month ago. It is the sharpest growth since the BOK began compiling related data in December, 2001.

BOK noted that businesses put out efforts to secure liquidity to minimize coronavirus impact. The government also increased policy financial support to fund businesses to overcome struggles stemming from the virus, increasing money flow into deposits and installment savings.

By Lee Eun-joo

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