The turnover rate of deposits in South Korea hit a record low in more than 11 years in July, central bank data showed Monday, in the latest indication that money circulation is clogged.

The deposit turnover rate for July recorded 20.3, the lowest since February 2005 when it stood at 18.1, according to the Bank of Korea.


The rate is calculated monthly based on the amount of withdrawals and the average account balance. Less turnover means fewer withdrawals, signaling that people are holding on to their cash instead of spending or investing.

The development came despite the central bank's decision to send the key rate to a record low of 1.25 percent in June to strengthen growth for Asia's fourth-largest economy.

Earlier this month the BOK held its policy rate steady for September amid concerns about snowballing household debts.

In July, the money supply in South Korea grew nearly 7 percent on-year due to increased deposits, both in local and foreign currencies, by households and companies, the central bank said.

The nation's "M2" totaled 2,348.3 trillion won ($2.1 trillion) in July, up 6.9 percent from a year earlier, according to the BOK. It marks a 0.7 percent rise from June.

M2 is a measure of the money supply counting the currency in circulation, including bank debentures and deposits with a maturity of less than two years, along with stock investments. It's a key economic indicator closely monitored by the authorities. (Yonhap)