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Money circulation stalled in S. Korea
2013.08.20 11:15:10 | 2013.08.20 16:45:31
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Money circulation has been stalled in South Korea, the US and Japan even after central banks in the countries pumped massive money to shore up an economic recovery.

Korea’s monetary base exceeded 100 trillion won ($89.2 billion) for the first time, but monetary multiplier, an indicator of currency in circulation, dropped to the lowest level since 2000.

[Money circulation stalled in S. Korea ] 기사의 본문 이미지

Monetary multiplier in the US and Japan also hit record lows after the launch of quantitative easing.

As of end-June, monetary multiplier, which is defined as M2 divided by the monetary base, slipped to 18.7 times, the lowest since 2000, according to the Bank of Korea (BOK) and financial investment industry sources Tuesday.

The decline in monetary multiplier came as the central bank has injected a lot of money, but money does not circulate well in the market.

Monetary base in Korea grew from 83 trillion won in January to 101 trillion won in June, but M2 climbed merely 2.6 percent from 1,845 trillion won to 1,893 trillion won over the corresponding period.

The more people are inclined to hold cash, the lower monetary multiplier. The public seems to prefer cash holdings with their stronger appetite on safe havens such as deposits.

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