The rush to withdraw fixed deposits, long-term funds shifting to short-term operations

Last year, the balance of fixed deposits over two years or more experienced the largest decline in history, indicating a shift in how funds are being managed. Data released by the Bank of Korea shows that by the end of December 2025, the balance of fixed deposits over two years was approximately 52.986 trillion won, down 7.128 trillion won from the previous year. This is the largest decrease since the 1998 foreign exchange crisis.

Analysts believe this decline reflects investors’ changing mindset, as recent diversification of investment opportunities has made them less willing to lock in funds for the long term. With the emergence of stocks, real estate, virtual assets, and other investment options, the burden of locking funds in fixed deposits for the long term has increased. As a result, investors are more inclined to operate with short-term funds and monitor market conditions.

Last year, balances of fixed deposits under one year and between one and two years both increased, highlighting short-term capital flow within the market. This phenomenon occurs amid rising asset prices, as many investors shift funds from long-term financial products to more liquid yield securities. Additionally, banks prefer to reduce the burden of paying long-term interest rates, favoring more flexible short-term deposits.

In an environment of significant interest rate fluctuations, banks have become more cautious in attracting long-term deposits, ultimately leading to increased short-term fund operations. The concern is how this flow of funds impacts other asset markets such as stocks and real estate. Rapid movement of investment capital can lead to increased market volatility. Whether this trend will continue or if other variables will influence the flow of funds remains to be seen.