"Interest Rate 2%? I'd Rather Buy 'Coins'... 25 Trillion Disappeared in Two Months"
- As deposit interest rates have recently fallen to the 2% range, the movement of funds to the stock and cryptocurrency markets is accelerating.
- 25 trillion won has been withdrawn from the deposits and savings accounts of the five major commercial banks over two months, indicating an asset movement phenomenon.
- It appears that the combination of interest rate cuts and loan regulations is diversifying financial investment destinations.
- The article was summarized using an artificial intelligence-based language model.
- Due to the nature of the technology, key content in the text may be excluded or different from the facts.
Deposit Interest Rate 'Annual 2% Era'
Even Internet Banks Break 'Annual 3% Barrier'
Acceleration of 'Money Move' to Stocks and Coins
The era of annual 2% deposit interest rates has returned. Disappointed by low interest rates, investors have withdrawn over 25 trillion won from the five major commercial banks' deposits and savings accounts in just two months.
According to the Korea Federation of Savings Banks on the 3rd, the average interest rate for 6-month, 24-month, and 36-month term deposits at savings banks fell to the 2% range annually. The average deposit interest rate at commercial banks is also on the verge of falling below 3% annually.
The 'money move' has also become more pronounced. In December last year, the decrease in term deposits at banks amounted to 21.1285 trillion won. Last month, 5.746 trillion won was also withdrawn from term deposits and savings accounts.
Popularity of Bank Deposits and Savings Declines... 25 Trillion Withdrawn in Two Months
"Government Loan Regulation Butterfly Effect"... Basic Interest Rate of Five Major Banks at 2.71% Annually
Mr. Jung, a 32-year-old office worker, recently received consecutive notices of interest rate cuts from savings banks. The notice stated that the interest rates for term deposits and parking accounts, which were in the 3% range annually, would be reduced by 0.3 percentage points and 0.2 percentage points, respectively. Savings banks, which offered higher interest rates than commercial banks, have uniformly lowered their rates to the 2% range annually.
The interest rate on deposits in the financial sector has fallen to the 2% range annually for the first time in three years. Even savings banks, which offer lower rates than commercial banks, have appeared. It is expected that the so-called 'money move' phenomenon, where funds disappointed by low bank interest rates move to the more volatile stock and cryptocurrency markets, will accelerate. There is also advice to re-strategize deposit subscription strategies in light of falling interest rates.
○ Even with Preferential Rates, Barely 3% Annually
According to the Korea Federation of Savings Banks on the 3rd, the number of savings banks offering term deposits in the 2% range annually, which was nonexistent until last year, has increased to five this year. The interest rate for a one-year term deposit at KB Savings Bank was 2.8% annually. The rates at Yegaram, Hana, and Shinhan Savings Banks are also 2.9% annually. The interest rates for these savings banks' term deposits are lower than the 3% annual rate (WON Plus Deposit) at Woori Bank, a commercial bank. The average deposit interest rate for all savings banks has fallen to 3.18% annually.
In the five major commercial banks, including KB, Shinhan, Hana, Woori, and Nonghyup, deposits in the 2% range annually are also expanding. The highest interest rate, which includes preferential rates that require meeting various conditions such as 'first transaction' and 'salary transfer,' has fallen to 3.0% annually. This is why there is speculation in the industry that "even the highest interest rate falling to the 2% range is only a matter of time."
Local and internet banks, which attracted customers with attractive interest rates, are also steadily lowering deposit interest rates. K Bank has lowered the interest rate for its representative deposit product, 'Code K Term Deposit,' twice this year. The rate, which was previously 3.1% annually, has been reduced by 0.1 percentage points each time and is currently 2.9% annually (based on a 12-month maturity). The average highest interest rate for 14 term deposits sold by local banks also barely reached 3.0% annually.
○ Leaving Banks for Stocks and Cryptocurrencies
Funds disappointed by low interest rates are leaving banks en masse. Last month, the deposits and savings accounts of the five major commercial banks decreased by 5.746 trillion won compared to the previous month. Considering that over 20 trillion won of lump-sum money was withdrawn from deposits at the end of last year, it means that over 25 trillion won has disappeared from bank accounts in two months.
The rush to impose loan regulations by banks since the end of last year is also affecting deposit interest rates. Banks have effectively suppressed loans by raising interest rates to meet the total loan volume at the end of the year. As the loans available to customers have decreased, the total amount of deposits, including deposits, must be adjusted. If money is indiscriminately piled up in the vault, it actually reduces capital efficiency. A financial industry official said, "The butterfly effect of loan regulation has led to a reduction in deposit interest rates."
Deposits that matured at the end of the year are leaving banks and moving to more volatile markets such as stocks and cryptocurrencies. According to the Korea Exchange, the average daily trading volume in the stock market last month was 9.6178 trillion won, an increase of about 900 billion won compared to the previous month (8.7353 trillion won). The trading volume on the KOSDAQ also increased from 6.5438 trillion won to 6.9389 trillion won during the same period.
As the money move becomes more pronounced, the industry believes that the won deposits at the five major virtual asset exchanges (Upbit, Bithumb, Coinone, Korbit, Gopax) have also exceeded 10 trillion won. In November last year, deposits surged to 8.8336 trillion won, doubling from the previous month (4.6893 trillion won). A commercial bank official said, "In a situation where it is difficult for bank deposit interest rates to rebound significantly in the short term, the trend of funds looking for better investment opportunities is expected to continue for some time," and advised, "Even if you subscribe to deposits, short-term deposits are advantageous as the phenomenon of short- and long-term interest rate inversion expands."
Jae-won Park / Eui-jin Jeong, reporters wonderful@hankyung.com

Korea Economic Daily

hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.PiCK News
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