S. Korea's money supply growth slows in Feb.

SEOUL, April 8 (Yonhap) -- South Korea's money supply grew at a slower pace in
February from a month earlier as local banks remained wary of expanding loans
amid the slumping economy, the central bank said Wednesday.
The country's liquidity aggregate reached 2,331.9 trillion won (US$1.74 trillion)
as of the end of February, up 10.8 percent from a year earlier and moderating
from a 10.9 percent gain the previous month, according to the Bank of Korea
(BOK).
The liquidity aggregate, the broadest measure of the nation's money supply,
covers currency in circulation, all types of deposits at financial institutions
and state and corporate bonds.
"February's slower growth in the money supply came despite liquidity provided by
the government as local banks curtailed loans to companies," it added.
The data comes a day before the BOK makes its monthly interest-rate decision. The
central bank is widely forecast to freeze the benchmark seven-day repo rate at a
record low of 2 percent for the second straight month.
The BOK made six consecutive rate cuts totaling 3.25 percentage points between
October and February in a bid to stave off an economic downturn.
Meanwhile, the BOK said a narrower measure of the money supply called the M2
advanced 11.4 percent on-year in February, with its growth hitting a 15-month
low.
The M2 covers currency in circulation and all types of deposits with maturity
less than two years at lenders and non-banking financial institutions, though not
with insurers and brokerage houses.
Despite a series of rate cuts by the BOK, growth of the country's M2 has eased as
local banks remained wary of increasing credit due to rising default rates and
distressed loans.
In a separate report, the BOK said the gain in the M2 is estimated to have slowed
in March to around 11 percent as banks' lending growth slowed despite a rise in
the government's fiscal spending.
sooyeon@yna.co.kr
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