This February, the money released into circulation increased by over 25 trillion won, marking the 21st consecutive month of growth in currency. This increase is influenced by the expectation of lower interest rates, which led to an influx of 8.5 trillion won in funds deposited in regular savings accounts within a month.
According to the '2025 February currency and liquidity' report released by the Bank of Korea on the 15th, the average broad money supply (M2) in February was 4,229.5 trillion won, an increase of 0.6% (25.7 trillion won) from the previous month. M2 has been on an upward trend for 22 months since May 2023.
M2 is a broad measure of currency that includes cash, demand deposits, and time deposits, as well as money market funds (MMF), time deposits with a maturity of less than two years, revenue securities, and repurchase agreements (RP). It typically signifies the amount of currency released into the market.
By financial product, regular deposits (+8.5 trillion won) and monetary trusts (+4.9 trillion won) increased over the month. Conversely, market-type products (-3.5 trillion won) and financial bonds (-2.7 trillion won) saw declines.
Regular deposits increased in response to depositors' proactive fund placements due to expectations of lower interest rates. In contrast, monetary trusts grew due to an expansion in funding for asset-backed commercial paper (ABCP) issuance. Meanwhile, market-type products and financial bonds decreased due to funding from deposit-taking institutions primarily focused on deposits.
By economic entity, liquidity increased in households and non-profit organizations (+3.6 trillion won), corporations (+4 trillion won), and other financial institutions (+17.1 trillion won). In contrast, liquidity decreased in other sectors, including social security organizations and local governments (-1.7 trillion won).
The average M1, which includes only cash, demand deposits, and time deposits (seasonally adjusted series), recorded a 0.4% increase from the previous month, totaling 1,282.1 trillion won. The liquidity of financial institutions (Lf, average) increased by 0.8% from the previous month to 5,757.6 trillion won, while the broad liquidity (L, end-of-month) rose by 0.6% to 7,208 trillion won.