The growth of Korea‘s money supply remained at the same pace in November of last year as the previous month although it picked up from a year earlier, the central bank said Thursday.
Korea’s M2, a narrow measure of the money supply, totaled 1753.3 trillion won ($1.5 trillion) in November 2011, up 4.4 percent from a year earlier, according to the Bank of Korea.
The growth speed of November M2 remained unchanged from a 4.4 percent on-year expansion tallied in October, which marked the sharpest growth since a 5 percent increase in February.
M2 covers currency in circulation and all types of deposits with a maturity of less than two years at lenders and non-banking financial institutions, excluding those held by insurers and brokerage houses.
The growth of Korea‘s money supply accelerated for the fourth consecutive month in October after M2 growth hit a seven-year low of 3 percent in June of last year, according to the BOK data.
“(Korea’s money supply) has been on a stable pace of growth since June,” said Kim Min-woo, an economist at the BOK.
The M2 largely grew at a double-digit pace for about three years since 2006 when liquidity spiked concurrently with property market bubbles.
The impact of the 2008 global financial crisis, however, made the on-year growth of the M2 slow sharply as banks were wary of extending loans. The annual growth of the M2 eased for the 12 consecutive month in June, 2011.
The BOK said in a separate statement that Korea‘s M2 is estimated to have grown at the mid-4 percent range in December of last year, around the same level as November, as foreign capital inflow moderately increased.
Liquidity provided by financial institutions grew 6.2 percent year-on-year to 2,279.2 trillion won in November. The growth picked up from a 6.1 percent expansion in October and marked the fastest growth in 10 months, the BOK added.
Korea’s liquidity aggregate, the broadest measure of the money supply, expanded 8.9 percent in November from a year earlier, the same pace as seen in the previous month, it added.
The liquidity aggregate covers currency in circulation and all types of deposits at financial institutions and state and corporate bonds.
The data was released one day ahead of the monthly rate-setting meeting by BOK policymakers. The central bank is widely expected to leave the key interest rate unchanged at 3.25 percent for the seventh straight month because of continued risks from Europe‘s debt crisis and inflationary pressure. (Yonhap News)
