S.Korea expands easy money for small firms by printing money

South Korea's central bank on Thursday expanded its easy-money program for small companies by printing money to stimulate the lackluster economy.

Bank of Korea (BOK) increased its lending facility for small- and mid-sized enterprises to 20 trillion won (18 billion U.S. dollars) from 15 trillion won, the bank said in a statement. The increase will take effect from April 1.

The 5-trillion-won increase at a single cast was the largest since the facility was introduced in 1994 to encourage banks to lend money to small companies at a low rate.

The latest case was the 3-trillion-won expansion in the facility in July 2014. The BOK increased the program by 2.5 trillion won during the 2008 global financial crisis.

The largest money-printing came as the prolonged weakness of corporate investment may dent the economy's long-term growth potential along with sluggish domestic demand.

Liquidity became ample after the BOK cut its policy rate to a fresh record low of 1.75 percent in March, but small companies suffered from lack of funds for facility investment as banks are reluctant to lend money to small firms, which have lower credit ratings and collateral capabilities than large corporations.

Under the program, the BOK lends money within the predetermined ceiling at a rate of 0.5-1.0 percent to banks, which in turn lend those funds to small companies at a relatively low rate. Endi