No Place to Invest
It has been found that the amount of short-term floating money in South Korea exceeded 950 trillion won for the first time in history as a result of low interest rates. Experts are warning that this money be invested in the real economy sector to create a virtuous cycle.
According to the Bank of Korea and the Korea Financial Investment Association, the amount totaled 958.9937 trillion won as of the end of May this year. The amount increased by 15.1398 trillion won in a month and by 93 trillion won or so from a year ago.
Money market deposit accounts and demand deposits accounted for 454.3345 trillion won and 188.57 trillion won out of the total, respectively. These were followed by money market funds (69.998 trillion won), cash management accounts (44.367 trillion won), certificates of deposit (20.1996 trillion won) and repurchase agreements (10.2284 trillion won). The amount also includes 69.695 trillion won in time deposit maturing within six months, 21.4718 trillion won in securities deposit and 80.1294 trillion won in cash.
In 2015 alone, the amount soared by 137 trillion won to show a year-on-year increase of no less than 17.2%. In May this year, the money multiplier reached a record low of 17. This implies that South Korea is in a liquidity trap in a way with liquidity in the money market rarely resulting in an increase in production, investment and household spending.