Money Supply Rises 39.1 Trillion Won in a Month, Up for 10th Straight Month

August average M2 balance: 4,266.8 trillion won on a seasonally adjusted basis
"Driven by inflows of surplus funds from semiconductor companies and other factors"

Money in circulation increased by nearly 40 trillion won in August, extending the growth in the money supply to 10 consecutive months. The increase was driven by an inflow of corporate surplus funds and other factors amid the semiconductor boom.

A staff member displays 50,000-won bills at Hana Bank’s Counterfeit Currency Response Center in Jung-gu, Seoul. Yonhap News Agency

According to “Money and Liquidity in August 2026,” released by the Bank of Korea on October 15, the average balance of broad money (M2) in August stood at 4,266.8 trillion won on a seasonally adjusted basis, up 39.1 trillion won (0.9%) from the previous month. M2 has risen for 10 consecutive months since November last year. The increase was the largest since August last year, when it rose by 44.5 trillion won.

M2 is a broad measure of the money supply that includes money market funds (MMFs), time and savings deposits with maturities of less than two years, certificates of deposit (CDs), and repurchase agreements (RPs), in addition to narrow money (M1), which consists of cash, demand deposits, and savings deposits that allow deposits and withdrawals at any time.

By financial product, the increase was led by time and savings deposits with maturities of less than two years and money trusts with maturities of less than two years. Time and savings deposits with maturities of less than two years rose by 28.7 trillion won, while money trusts with maturities of less than two years increased by 14.2 trillion won. A Bank of Korea official explained, “Time and savings deposits with maturities of less than two years increased as more corporate surplus funds flowed in and household funds returned to growth,” adding, “Money trusts with maturities of less than two years also increased as deposits from semiconductor companies and other funds flowed in.”

By economic sector, nonfinancial corporations posted an increase of 33.9 trillion won, driving up the overall gain, while other financial institutions (1 trillion won) and households and nonprofit organizations (300 billion won) returned to growth.

The average balance of old M2, which includes investment trust accounts, rose by 0.7% from the previous month and by 9.9% from the same month a year earlier. Investment trust accounts increased by 42.6% year on year, lifting old M2 by 4.5 percentage points, according to an analysis.

The average balance of M1 stood at 1,357.6 trillion won on a seasonally adjusted basis, down 1.1% from the previous month.

Financial institution liquidity (Lf; average balance) rose by 0.6% from the previous month to 6,386.4 trillion won, while broad liquidity (L; end-period balance) increased by 0.2% from the end of the previous month to 8,094.3 trillion won. Lf includes M2, as well as long-term financial products with maturities of two years or more and financial products issued by non-deposit-taking institutions. L includes Lf, as well as other financial institution products, government bonds, local government bonds, corporate bonds, and commercial paper.

This content was produced with the assistance of AI translation services.