SEOUL, May 15 (Xinhua) -- South Korea's money supply fell in almost two years due to weaker demand for financial bonds with a maturity of less than two years, central bank data showed Thursday.
The seasonally-adjusted M2, or broad money, shrank 0.1 percent to 4,227.8 trillion won (3.03 trillion U.S. dollars) in March compared with the previous month, marking the first reduction in 23 months since April 2023, according to the Bank of Korea (BOK).
The downturn was attributed to lower demand for transferable savings deposits and financial bonds with a maturity of less than two years that offset lower policy rates.
The BOK cut its benchmark interest rate by a quarter percentage point to 2.75 percent in February after slashing it by the same percentage point in October and November last year.
The M1, or narrow money, slipped 0.2 percent in March on a monthly basis.
The M1 refers to currency in circulation, demand deposits and transferable savings deposits equivalent to cash. The M2 adds money market funds, time deposits and financial products that mature in less than two years.
The liquidity of financial institutions, called Lf, swelled 0.2 percent in the cited month, while the liquidity aggregate, the broadest measure of money supply, climbed 0.3 percent.
The Lf includes financial products with a maturity of over two years and liquidity at insurers and brokerages along with M2. The liquidity aggregate adds state and corporate bonds to the Lf. ■
