Money supply surges by near record pace in Aug in Korea amid asset frenzy

Money supply in South Korea rose by near record pace in August on still-hot demand for housing and stocks.

The country’s M2 money supply reached 3,494.4 trillion won ($2.93 trillion) in August, up 1.5 percent or 50.5 trillion won from July, according to data released by the Bank of Korea on Wednesday. The increase almost matched the largest-ever gain of 50.6 trillion won in April since the data became available in 2002.

M2 is a broad measure of money supply and closely watched indicate 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 as well.

Funds held by households and non-profit organizations gained 11.3 trillion won, and companies 16.9 trillion won. Other financial institutions added the largest 18.2 trillion won.

The growth in money supply is driven by the booming retail investment for stocks as well as the steady loan demand for housing, according to a central bank official.

By product type, money trusts of less than two years gained 9.2 trillion won, demand deposits 8.4 trillion won, and savings deposits 8.1 trillion won.

By Lee Ha-yeon

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