Korea`s M2 increase rate highest among competitors

Korea`s total money supply increase rate is the highest among its main competitors, including advanced countries, and is a key factor boosting inflationary pressure. According to an international comparison of total money supply (M2) increase rates released by the National Statistical Office Friday, the M2 growth rate in Korea rose from 15.6% in 1995 to 27% in 1998, right after the foreign exchange crisis. It climbed further to 27.4% in 1999 but slipped to 25.5% last year. Compared the figures in Korea, the total money supply growth rate in Japan remained at a low level of only 3% in 1995, 4.4% in 1998, 3.7% in 1999, and 2.1% in 2000. The M2 growth rate dropped from 9.4% in 1995 to 6.5% last year in Taiwan, and from 10.6% to 8% in Hong Kong. Singapore also kept its M2 rate at about the 8.5% level.

Noting that maintaining a high M2 growth rate on a long-term basis tends raise the inflation rate, a financial expert said, ``It is important to eradicate expectations of higher inflation by pulling down the money supply growth rate.``

[Yonhap]