Liquidity Growth Slows in April

By Na Jeong-ju

Staff Reporter

The country's money supply grew at a slower pace in April from a month ago, but is still on a fast growth course, the Bank of Korea (BOK) said, Monday.

The outstanding liquidity aggregate, the broadest measure of money supply, amounted to 1,889 trillion won as of the end of April, up 0.7 percent or 12.7 trillion won from the previous month. In March, the growth rate was 0.9 percent. It is the first slowdown in three months.

Compared with a year earlier, the April figure was up 11.8 percent, down from a four-year high of 12.3 percent in March, according to the central bank.

The BOK said loans extended by financial institutions continued to rise despite efforts to curb a sharp growth in liquidity and tightened lending regulations. Year-on-year, the money supply grew at a slower pace in April for the first time in three months, but it is early to say that it is losing growth momentum, it said.

``The slower growth in April is largely due to seasonal factors, such as companies' tax payments,'' the bank said.

In the first quarter, bank loans to companies and households grew 16.7 trillion won, of which up to 83 percent, or 14.2 trillion won, was extended to smaller firms. As part of efforts to diversify interest income sources, banks are now expanding loans to stable small-scale businesses and individuals.

The liquidity extended by financial institutions rose by 3.5 trillion won month-on-month in April, slowing from a 13.3 trillion won jump in March, to an outstanding 1,564 trillion won. The central bank attributed the weaker growth to companies' corporate and surtax payments, which led to an 8.2 trillion won plunge in money market deposit accounts.

The liquidity supplied by government and corporate bonds gained by 9.2 trillion won on-month to an outstanding 324.8 trillion won.

Short-term liquidity, including cash, money market deposit accounts and financial products with a maturity shorter than six months, fell to 545.6 trillion won in April from 550.6 trillion won the previous month. It accounted for 28.9 percent of the total money supply, down 0.5 percentage points from the previous month, the central bank said.