South Korea's money supply growth rate fell to a 7-year low in March due to payments of corporate tax, the central bank said Thursday.
The country's M2, so-called broad money, increased 4.3 percent on-year to 1,677.5 trillion won (1.55 trillion U.S. dollars) in March after posting a five percent on-year gain in February, the Bank of Korea (BOK) said in a monthly report.
The March reading marked the slowest level since 3.9 percent in May 2004, and the on-year growth rate continued its downtrend since it peaked at 9.3 percent in July last year.
The slowing M2 growth was attributable to corporate tax payments and a local bank's spinoff of its card unit, according to the BOK. Kookmin Bank split its credit card unit whose assets and credits was excluded from the M2 calculation.
The on-year growth rate of M1, dubbed as narrow money, registered 11.6 percent in March, after recording 11.5 percent the previous month, the BOK said.
The M1 covers currency in circulation and demand deposits equivalent to cash, while the M2 adds financial products with a maturity of less than two years such as deposits and financial bonds to M1.
Liquidity of financial institutions, also called Lf, recorded a 4.7 percent growth rate in March from a year earlier, down from a 5.2 percent gain the previous month.
The liquidity aggregate, the broadest measure of money supply, posted a 7.6 percent on-year rise in March, after expanding 7.2 percent in February, the BOK added.
The Lf covers financial products with a maturity of more than two years and liquidity at insurers and brokerage houses along with the M2, with the liquidity aggregate adding state and corporate bonds to the Lf.