South Korea's money supply grew 1.2% in May

This was due to an increase in household and corporate loans.

South Korea's money supply grew by a record amount in May, central bank data revealed. This was due to an increase of loans to households and firms amid the coronavirus pandemic, reports Yonhap News Agency.

The country's M2 stood at $2.55t (KRY3,053.9t) as at end of May, according to preliminary data by the Bank of Korea (BOK).

The amount represents an increase of 1.2%, or KRY35.4t from April, which is the biggest on-month gain since data tracking began in December 2001.

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

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 that M2 rose sharply in May as households and companies rushed to secure cash amidst the prolonged economic impact from the COVID-19 outbreak.

Funds held by households and nonprofit organisations increased by US$12.52b (KRY15.1t) in May from the previous month, with those held by businesses rising by $12.1t (KRY14.6t).

In addition, low interest rates are said to have prompted savers to shift their money to short-term instruments from time deposits and other fixed products.

Photo courtesy of Sesinado from Pexels