Japan M3 Money Stock Climbs 0.6%, Reaches Record ¥1.6 Quadrillion

Japan’s money supply continued to expand in July, with Bank of Japan data showing the broadly defined M3 measure rose 0.6% from a year earlier to a record ¥1,619.4 trillion. The pace of growth accelerated for a third consecutive month, underpinned by stronger bank lending, and marked a fourth straight month of record-high balances. The narrower M2 gauge, which excludes large time deposits held by financial institutions, increased 1.0% year on year to ¥1,269.6 trillion, also extending a five-month run of record highs. Within M3, quasi-money such as household time deposits climbed 3.8% to ¥507.5 trillion, the fastest annual gain since April 2004, as savers shifted funds from ordinary accounts to higher-yield products amid rising interest rates. Cash in circulation declined 1.8%, while deposit currency fell 0.6%, the sharpest drop since January 2009. Broader liquidity, which counts government and corporate bond holdings, grew 1.6% to ¥2,222.3 trillion. The figures suggest tighter monetary settings are encouraging deposit restructuring even as overall liquidity in the economy continues to rise on the back of sustained loan growth.