South Korea's M2 money supply continued to grow from a month earlier in May on a rise in short-term deposits, central bank data showed Wednesday.

The M2 came to 2,318.5 trillion won ($2,024.7 billion) as of end-May, up 0.7 percent from a month earlier, according to preliminary data from the Bank of Korea.


The May tally marks an acceleration from a 0.3 percent on-month gain in the previous month.

M2 refers to currency in circulation, including bank debentures and deposits with a maturity of less than two years, along with stock investments. It, however, does not include government or corporate bonds.

The rise came mostly from an increase in short-term deposits and money market funds amid record low interest rates.

Bank deposits with a maturity of less than two years gained 9.1 trillion won to 913.5 trillion won over the cited period, while money held in money market funds rose 4.2 trillion won to 67.46 trillion won.

The rise in the overall money supply came after the central bank slashed its key rate to a record low of 1.25 percent in June.

The country's money supply has been on a steady rise since the start of 2015 as the BOK began cutting its policy rate in August 2014 to bolster growth in Asia's fourth-largest economy.

The bank's easing stance, however, has also contributed to a steep rise in household debt, which reached an all-time high of 1,223.7 trillion won as of end-March (Yonhap)