Korea's money supply growth below long-term average since 2023: BOK
An official inspects 50,000-won banknotes at Hana Bank's counterfeit response center in Seoul, Sept. 25, 2023. Yonhap
Korea's money supply growth has remained below its long-term average since January 2023, the central bank said Tuesday, unveiling a new framework for measuring liquidity.
After years of preparations, the Bank of Korea (BOK) announced an overhaul of its monetary and liquidity statistics that excludes equity funds, bond funds, exchange-traded funds (ETFs) and other beneficiary securities from broad money, known as M2.
Instead, the BOK included such highly volatile beneficiary securities in financial institution liquidity (Lf). M2 in Korea traditionally measured cash, demand deposits and other liquid financial instruments.
Under the new standard, M2 stood at 4,056.8 trillion won ($2.82 trillion) in October, compared with 4,466.3 trillion won under the previous standard, according to the BOK. Accordingly, the on-year growth rate of M2 slowed to 5.2 percent from 8.7 percent under the old standard.
"The newly calculated M2 growth rate has remained below the long-term average of 7.5 percent since January 2023," BOK official Kim Min-soo said.
The revamp comes amid criticism that the central bank's accommodative monetary policy has fueled excessive liquidity, contributing to a weaker won and rising housing prices.
The BOK stressed that the changes had been long planned in line with the 2017 revision by the International Monetary Fund (IMF) of its monetary and financial statistics manual.
"The change is expected to improve international comparability of Korea's monetary statistics as major advanced economies, including the United States, also exclude beneficiary securities from M2," Kim said.
"Given heightened public interest in monetary indicators, we will publish both the old and new versions in parallel for the next year."