Korea's M2 Up 0.7% in Jan 2025 as Liquidity Stays Modestly Strong

The Bank of Korea released its January 2025 figures for money and liquidity, showing broad liquidity in the domestic market remained modestly strong. M2, the broadest measure of money, rose by 27.7 trillion won to 4,108.9 trillion won, up 0.7% from December. On a year-over-year basis, M2 was up 4.6%.

The central bank also reported the traditional measure that includes securities, noting that M2 including securities increased 1.2% month-on-month and 8.4% year-over-year. The rise in securities contributed meaningfully to the year-over-year gain. In line with IMF guidance, the Bank of Korea began publishing two M2 series this year—one excluding riskier assets such as securities and the other the conventional figure that includes them.

Institutional detail shows the composition shifts behind the broader move. Other currency-denominated financial products rose by 21 trillion won, aided by money management account activity and increased funds awaiting equity investments. Household savers’ more liquid funds rose by 15.5 trillion won, while time deposits and other near-cash instruments grew as households and businesses adjusted to market conditions.

By sector, non-financial corporations added 18.9 trillion won to the broad money stock, and other financial institutions added 15.2 trillion won. Households and nonprofit organizations increased by 1.9 trillion won, while other sectors contracted by 9.9 trillion won. These shifts indicate where liquidity is accumulating within Korea’s economy.

The narrow money measure, M1, rose 1.3% from December and is up 5.8% from a year earlier. Liquidity held by financial institutions totaled 7,759.2 trillion won, up 0.3% from the previous month.

For U.S. readers, these numbers matter because Korea is a major global trading partner and a key node in global technology and manufacturing supply chains. Korea’s liquidity trends influence the won’s strength, domestic inflation pressures, and the cost of financing for Korean exporters and manufacturers. The IMF-aligned move to publish two M2 series also enhances transparency for international investors assessing Korea’s monetary conditions.

In practical terms, a continued, balanced liquidity backdrop can support corporate investment and consumer spending while shaping expectations about future monetary policy and currency movements. As Korea’s economy remains intertwined with global electronics and semiconductor supply chains, shifts in liquidity and credit conditions can ripple through global markets, including those in the United States.