Money supply jumps W39tr in August, posting fastest growth in a year

South Korea's money supply expanded by more than 39 trillion won ($29.1 billion) in a single month in August, posting its fastest growth rate in a year, as an influx of corporate surplus funds also drove fixed deposits and installment savings with maturities under two years to their largest monthly increase in three years and eight months.

The Bank of Korea said Thursday that the average broad money supply (M2, measured by average balance) stood at 4,266.8 trillion won in August, up 39.1 trillion won, or 0.9 percent, from the previous month. That marked the 10th consecutive month of growth since November last year. The M2 growth rate was the highest since August 2025, when it rose 1.1 percent.

M2, the broad measure of money supply, encompasses cash, demand deposits and savings accounts with unlimited withdrawals — collectively known as M1 — as well as short-term financial instruments that can be quickly converted to cash, including money market funds (MMF), fixed deposits and installment savings with maturities under two years, certificates of deposit (CD), repurchase agreements (RP), financial bonds with maturities under two years, and monetary trusts with maturities under two years.

Among these components, fixed deposits and installment savings with maturities under two years rose 28.7 trillion won in the month — the largest increase since December 2022, when they grew 44.6 trillion won. The Bank of Korea said the gain reflected greater inflows of corporate surplus funds and an increase in household savings.

Monetary trusts with maturities under two years also grew by 14.2 trillion won, driven by deposits from chipmakers and other companies. That was the largest increase since January 2022, when they rose 36.3 trillion won.

MMFs expanded by 12.6 trillion won, boosted by an inflow of surplus funds tied to improved corporate earnings, reversing a decline of 9.5 trillion won the previous month.

By economic sector, non-financial corporations posted an expansion of 33.9 trillion won, while other financial institutions (up 1 trillion won) and households and nonprofit organizations (up 300 billion won) swung back to growth. Other sectors contracted by 3.5 trillion won.

Non-financial corporations recorded their 10th consecutive month of growth, posting the second-highest monthly increase since the record 37.8 trillion won set in June.

The narrow money supply measure M1 — which covers only cash, demand deposits and savings accounts with unlimited withdrawals — fell 14.9 trillion won, or 1.1 percent, from the previous month to 1,357.6 trillion won, marking a second straight month of decline following July.