July M2 Rises 0.3%, Showing Divergence Between Corporate and Household Currency Holdings

While the overall money supply increased in July, the movement of the products where funds resided and the entities holding them did not follow a single direction. According to data on money and liquidity released by the Bank of Korea on September 15, the period-average balance of M2 (broad money) for July on a seasonally adjusted basis stood at 4,225.6 trillion won, up 0.3% from the previous month. Holdings by non-financial corporations and time deposits and installments increased, whereas holdings by households and non-profit institutions along with demand-type savings deposits decreased. The internal compositional shifts, rather than the aggregate increase, serve as an important clue in reading this release. The period-average is the average of balances over a month. Unlike the period-end balance, which represents holdings on a single day at the end of the month, it reflects fund move…