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Japan’s most closely watched money supply gauge rose 2 percent in January from a year earlier, but the balance of quasi-money — mostly in time deposits — fell 12 percent, the Bank of Japan said Monday.

The pace of growth in the average daily balance of M2 — cash in circulation, demand deposits and quasi-money — plus certificates of deposit was the smallest since December 2000.

The balance came to 676.3 trillion yen, compared with a revised 675.9 trillion yen the previous month, the BOJ said.

The balance of quasi-money totaled 317.7 trillion yen, easing off from a 12.3 percent decline in December. It fell by a record 13.8 percent in June.

Quasi-money refers to time deposits and other types of savings at banks that cannot immediately be cashed, including foreign-currency deposits and nonresidents’ yen deposits.

The balance of time deposits has been steadily falling since before April 1, when the government slapped a 10 million yen cap on the per-depositor guarantee for time deposits in the event of a bank failure. The decline is in line with a surge in the balance of demand deposits. Numerous companies and individuals have shifted money from time deposits into demand deposit accounts.

The balance of M2 plus CDs, held principally by corporations, individuals and local governments, has a close correlation to changes in economic activity.

A breakdown of the data shows that cash in circulation rose 8.7 percent to 67.6 trillion yen in January, down from a revised 9.2 percent gain in December, and that demand deposits — ordinary deposits and checking accounts — soared 28 percent to 271.7 trillion yen, slipping from a revised 29.9 percent rise in December.

The balance of M1 — cash in circulation plus demand deposits — climbed 23.6 percent to 339.3 trillion yen, down from a 25.2 percent surge in December.

The balance of CDs plummeted 30.7 percent to 19.2 trillion yen, compared with a revised fall of 34.4 percent in December.

Broadly defined liquidity, the widest measure of the money supply, rose 1.2 percent to 1.32 quadrillion yen in January, following a revised 0.9 percent increase in December.

The gauge includes postal savings, deposits at agricultural and fishery credit cooperatives, loan trusts and money trusts, bank debentures, and Japanese and foreign government bonds, as well as the M2 balance plus CDs.

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