S. Korea's money supply gains at record pace in May

South Korea's money supply grew by a record amount in May on increased loans to households and firms amid the coronavirus pandemic, central bank data showed Wednesday.

The country's M2 stood at 3,053.9 trillion won ($2.55 trillion) as of the end of May, according to preliminary data by the Bank of Korea (BOK).

The amount represents an increase of 1.2 percent, or 35.4 trillion won, from April, which is the biggest on-month gain since data tracking began in December 2001.

From a year earlier, M2 surged 9.9 percent, the highest on-year increase since the 10.5 percent hike posted in October 2009.

A key economic indicator closely watched by authorities, M2 is a measure of the money supply that counts cash, demand deposits and other near money that is easily convertible to cash.

The BOK said M2 rose sharply in May as households and companies rushed to secure cash amid the prolonged economic impact from the COVID-19 outbreak.

Funds held by households and nonprofit organizations increased by 15.1 trillion won in May from the previous month, with those held by businesses rising by 14.6 trillion won.

In addition, low interest rates probably prompted savers to shift their money to short-term instruments from time deposits and other fixed products, the central bank added.

The BOK has conducted two rate cuts in less than three months since the country confirmed its first coronavirus case on Jan. 20, sending the policy rate to a record low of 0.5 percent. (Yonhap)