The benchmark of Japan's money supply rose 2.1 percent in 2008 from a year earlier as savers favored holding their money in high-interest time deposits while fleeing stock markets amid the global financial turmoil, the Bank of Japan said Tuesday.
The average daily balance of M2 came to ¥741.8 trillion, the BOJ said in a preliminary report. The headline reading compares with a 1.6 percent increase in 2007.
M2 consists of cash in circulation, demand and time deposits as well as certificates of deposit at domestic banks, including the BOJ, and Japanese branches of foreign banks.
The result came as the balance of quasi-money, which includes time deposits, rose 1.8 percent during the 12 months to ¥536.7 trillion, the largest increase since 1991, when the balance grew 3.6 percent.
The balance of investment trusts rose 9.7 percent to ¥73.7 trillion, less than the 23.8 percent gain in 2007, as investors apparently refused to take risks, pulling back from unsettled stock markets.
M1, which refers to cash in circulation and demand deposits, fell 0.5 percent to ¥481.8 trillion, the sharpest decline since the BOJ began releasing comparable figures in 1964.
Some companies have been forced to withdraw money from their savings after facing trouble raising operating capital in financial markets given the credit crunch, a BOJ official said.