Where does money come from?

Printed money is only a small part

Did the government print a lot of money? Notes and coins issued by the Bank of Korea are only about 5% of the money in the country in 2025. The white bundles are notes and coins; the blue bundles are bank deposits. Most bank deposits are created when banks lend money. When a bank lends someone 100 million won, 100 million won newly appears in that person's account.

Why?This is not magic copying of money. The moment someone borrows, they get spendable money in their account and, at the same time, a debt of the same amount that must be paid back. Other people's deposits stay where they are, so the money in the country grows by that much. The more people and companies borrow from banks, the more money there is — and the Bank of Korea raises or lowers its base interest rate to control how much people borrow.

Learn moreWhen a loan is paid back, the same amount of deposits disappears. Textbooks often say "banks keep a small part of deposits and lend out the rest," but the Bank of England explained in 2014 that, in reality, lending comes first and creates deposits.

Share of notes and coins in the money, 2025

5%

Notes and coins, 2025

about 190 trillion won

Money in the country, 2025

about 3,994 trillion won

calculated from Bank of Korea ECOS data and recorded ramen prices