Korea’s Currency Supply Surpasses ₩210 Trillion – First Time Ever

South Korea’s currency in circulation has reached a historic high, exceeding 210 trillion won for the first time, according to data released by the Bank of Korea on February 7, 2026. This represents a 9.1% increase compared to the end of the previous year.

The currency issuance balance, which is calculated by subtracting the amount of currency returned to the Bank of Korea from the total amount supplied to the market, reflects the amount of physical cash held by the public. While growth in the currency exchange rate slowed to 3.6% in 2023, influenced by higher interest rates, it is projected to rise for two consecutive years beginning at the end of 2024 as interest rates begin to decline.

This trend is driven, in part, by a tendency to hold cash rather than deposit funds when interest rates fall. Despite the increasing prevalence of non-cash payment methods like credit and mobile payments, demand for physical currency has been bolstered by increased consumption, fueled by interest rate cuts and government stimulus programs such as livelihood recovery subsidies.

The increase in currency circulation follows a period of 23 consecutive months of growth in the broader money supply, as measured by M2, which includes cash, demand deposits, and other easily convertible financial instruments. According to data released in May 2025, Korea’s M2 fell for the first time in nearly two years in March 2025, decreasing by 0.1% from the previous month to 4,227.8 trillion won (approximately $3.01 trillion). This decline was primarily attributed to a reduction in savings deposits and other liquid financial products.

Specifically, savings deposits decreased by 7.2 trillion won in March 2025, while other liquid financial products fell by 5.7 trillion won. Financial bonds with maturities under two years also experienced a decrease of 4.8 trillion won. However, investment funds increased by 8.6 trillion won, and demand deposits rose by 5.5 trillion won, partially offsetting these declines.

A Bank of Korea official explained that the decrease in savings deposits was linked to fiscal spending by local governments. The reduction in other liquid financial products, particularly foreign currency deposits, was attributed to overseas investments and import payment settlements. These factors suggest a shift in financial behavior, with individuals and businesses reallocating funds from traditional savings accounts to investments and international transactions.

While the monthly M2 figure decreased, the year-on-year increase remained positive at 6.1% in March 2025. Korea’s liquidity aggregate, the broadest measure of money supply, also edged up 0.3% from the previous month to 7,236 trillion won in March 2025.

Looking at broader trends, Korea’s money supply had previously experienced a period of decline in March 2025, ending a 23-month growth streak. Data from November 2025 indicated that the money supply M2 increased to 4,496,024.20 KRW Billion, a slight increase from 4,487,684.90 KRW Billion in October 2025. However, figures from November 2025, reported in USD, showed a decrease to 2,764.391 USD billion, down from 2,838.734 USD billion in October 2025.

The interplay between currency issuance, M2, and liquidity aggregates provides a complex picture of the Korean financial landscape. The recent increase in currency in circulation, coupled with the fluctuations in broader money supply measures, highlights the dynamic nature of financial flows and the influence of economic factors such as interest rates, government policies, and global investment trends.

The Bank of Korea will continue to monitor these trends closely to assess their impact on the Korean economy and adjust monetary policy accordingly. The ongoing shifts in financial behavior, as evidenced by the changes in savings deposits, investment funds, and currency demand, will be key considerations in these assessments.