Money supply in South Korea surged by $45 billion on month in April, the largest in more than 12 years, on asset frenzy from stocks to cryptocurrencies.

The country’s M2 money supply reached 3,363.7 trillion won ($3 trillion) in April, up 50.6 trillion won or 1.5 percent from the previous month, according to the data released by the Bank of Korea on Tuesday.

The on-month growth is the fastest since February 2009.

M2 is a broad measure of money supply and closely watched indicator for authorities. It includes cash, demand deposits, savings deposits, two year or less deposits, and bank debentures. M2 is used to refer to flow of cash of short-term funds that can be easily converted into cash.

Against a year ago, M2 grew 11.4 percent in April, the data found.

Funds held by households and non-profit organizations gained 9.9 trillion won and companies 15.7 trillion won. Other financial institutions added 16.9 trillion won.

The growth in money supply is driven by the booming retail investment for stocks and cryptocurrencies on top of the steady loan demand for housing, according to an official from the central bank. “Retail subscription for SK IE Technology (SKIET) reached 80.9 trillion won and borrowing for cryptocurrency investment also soared, which has been boosting money circulated in the market,” said the official.

The government’s loan support programs for small and mid-sized companies amid Covid-19 increased money supply for businesses, according to the official.

By type, demand deposits gained 20.4 trillion won and money market funds 9.8 trillion won. Deposits of less than two years grew 9.3 trillion won.

By Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]