M2 Increased by 421.3 Trillion Won in June, Influenced by Short-term Deposits and MMFs

In June, South Korea's broad money supply M2 increased to 421.3 trillion won, continuing its upward trend since November of last year. This rise was driven by inflows of idle funds into short-term deposits and money market funds (MMFs), which increased by 29.4 trillion won compared to the previous month. The Bank of Korea announced that the seasonally adjusted M2 increased by 0.7% from the previous month. On a year-on-year basis, it rose by 6.0%. M2 is a measure of money supply that includes cash, demand deposits, time deposits with maturities of less than two years, MMFs, market-type products, financial bonds, and monetary trusts, reflecting the liquidity available to households, businesses, and financial institutions. The recent increase was primarily led by the expansion of short-term deposits and MMFs, with short-term deposits being sensitive to changes in interest rates and funding demand, while MMFs represent idle funds primarily invested in short-term financial products. Although the M2 growth rate slightly decreased from 0.8% in May to 0.7% in June, the upward trend was maintained. The increase in money supply reflects the movement of bank deposits, short-term financial products, and idle investment funds, but it cannot definitively determine the direction of risk asset prices based solely on M2 growth. While the Bank of Korea's data shows changes in money supply and its components, it does not include information on the movement of funds into the virtual asset market.

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