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Seoul, Feb 8 (IANS) South Korea''s money supply growth stayed unchanged in December 2011 year due to a base effect, the central bank said Wednesday.
The country''s M2, so-called broad money, expanded 4.4 percent in December from a year earlier, posting the same rate of on-year expansion for three straight months, according to the Bank of Korea (BOK).
The M2 growth had trended down since 2008, but the money supply grew gradually in recent months due to the low base effect. The M2 growth rate continued to rise over the past six months after falling to the seven-year low of 3 percent in June, Xinhua reported.
The M1, dubbed as narrow money, registered an on-year growth rate of 1.6 percent in December, marking the fourth straight month of fall. The decline was attributed to slower growth in the balance of savings account caused by the base effect, the BOK said.
The M1 covers currency in circulation and demands deposits equivalent to cash, which the M2 adds financial products that mature in less than two years such as deposits and financial bonds to M1.
Liquidity of financial institutions, also called Lf, advanced 6.2 percent on-year in December, unchanged from a month before, according to the BOK.
The on-year growth of the liquidity aggregate, the broadest measure of money supply, expanded 9.4 percent in December from the previous year, faster than 8.9 percent tallied in the previous month.
The Lf covers financial products with a maturity of more than two years and liquidity at insurers and brokerage houses along with the M2, while the liquidity aggregate adds state and corporate bonds to the Lf.
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Copyright Indo-Asian News Service
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