South Korea saw growth of its money supply slow down in February from a month earlier with local banks staying wary of extending loans, the central bank said on Wednesday.

South Korea's money supply, measured by liquidity aggregate, showed an on-year growth of 10.8 percent to stand at 2,331.9 trillion won (US$1.74 trillion) in February, slowing down in growth compared with a 10.9 percent rise in the previous month, the Bank of Korea (BOK) said.

The liquidity aggregate, the broadest measure of the nation's money supply, covers currency in circulation, all types of deposits at financial institutions and state and corporate bonds.

February's slower growth in money supply came despite the government's efforts to provide liquidity as local banks were still hesitant to extend loans to companies, according to the BOK.

The data comes a day before the BOK is known to make its monthly interest-rate decision, for which it is widely forecast to freeze the benchmark seven-day repo rate at a record low of two percent for the second straight month.

(Xinhua News Agency April 8, 2009)