Money supply in South Korea increased the most in more than five years amid the continuation of expansionary monetary policy, central bank data showed Wednesday.
The country's M2, or broad money, came in at 2,230 trillion won (1.93 trillion U.S. dollars) in September, up 9.4 percent from a year earlier, according to the Bank of Korea (BOK). It was the fastest monthly expansion in more than five years since June 2010 when the M2 jumped 9.7 percent.
The money supply expanded by more than 9 percent for six straight months as the BOK kept an expansionary monetary policy for long. The BOK cut its benchmark interest rate by 25 basis points in August and October last year each, before lowering it further by a quarter percentage point in March and June this year to an all-time low of 1.5 percent.
The M1, dubbed as narrow money, surged 21.4 percent in September from a year earlier. The M1 covers currency in circulation, demand deposit and transferable savings deposit equivalent to cash.
The M2 adds money market fund, money trust, time deposit and financial products that mature in less than two years to M1. Liquidity of financial institutions, called Lf, advanced 10.5 percent in September from a year earlier.
The on-year growth of liquidity aggregate, the broadest measure of money supply, was 9.2 percent in September. The Lf includes financial products with a maturity of more than two years and liquidity at insurers and brokerages along with M2, while the liquidity aggregate adds state and corporate bonds to the Lf.
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