Holding On
According to the Bank of Korea on June 23, excess cash held by Korean households and non-profit agencies rose in the first quarter this year, as their borrowing dropped sharply from the previous quarter.
The value of excess cash reached 29.6 trillion won (US$26.8 billion) in the first quarter, more than double from the value of 14.5 trillion won in the last quarter of 2014.
Excess cash refers to the volume of money that remains on balance sheets for households after making deposits and stock investments. The figure is calculated by subtracting the amount of money raised during the period from the amount used for financial assets.
The first quarter figure is the highest in history. The jump quarter-on-quarter came as financial liabilities slowed at a steeper pace compared with financial assets. Financial liabilities decreased 16.6 trillion won (US$14.9 billion) from the previous quarter, while financial assets declined 1.6 trillion won (US$1.4 billion).
An official at the central bank said that an income rise also contributed to the increase in overall excess cash holdings of households.
The financial liabilities of households and non-profit agencies increased more than two times, to 14.2 trillion won (US$12.8 billion) from 6.6 trillion won (US$5.9 billion) a year earlier, reflecting a growing demand for household loans amid a low rate trend standing at a record low of 1.5 percent.