SEOUL, April 11 (Xinhua) -- Money supply in South Korea grew slowly as banks tightened loans to companies on higher corporate credit risks, central bank data showed on Tuesday.
The MS, dubbed broad money, gained 5.9 percent in February from a year earlier, according to the Bank of Korea (BOK). The M2 growth slowed from 7.5 percent in December last year to 6.9 percent in January this year.
The February growth rate was the lowest in nearly three years since April 2014. Banks tightened corporate lending as credit risks were heightened amid the ongoing restructuring of local shipbuilders and shipping firms.
The M1, also called narrow money, advanced 9.7 percent in February from a year earlier. The M1 growth was still fast as the BOK kept its benchmark interest rate at an all-time low of 1.25 percent since June last year.
The M1 covers currency in circulation, demand deposit and transferable savings deposit equivalent to cash. The M2 adds money market fund, money trust, time deposit and financial products that mature in less than two years to M1.
Liquidity of financial institutions, called Lf, expanded 7.4 percent in February from a year ago. The on-year growth of liquidity aggregate, the broadest measure of money supply, was 7.2 percent in the same month.
The Lf includes financial products with a maturity of more than two years and liquidity at insurers and brokerages along with M2. The liquidity aggregate adds state and corporate bonds to the Lf.
