Central Bank of China

PRESS RELEASE Release Date: Sept. 23, 2002




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MONETARY POLICY DECISIONS OF THE BOARD MEETING

(Sept. 23, 2002)

The domestic economy shows signs of moderate recovery with improving capacity utilization and profitability in the corporate sector and persisting downward adjustment in the inventory level. Meanwhile, prices remain stable. Against this background, the Central Bank of China (CBC) reached the following decisions in its Board meeting in line with the objectives to maintain financial stability and foster economic growth:

1.The CBC keeps the discount rate, the rate on accommodations with collateral and the rate on accommodations without collateral unchanged at 1.875%, 2.25% and 4.125%, respectively.

2.The CBC has engaged in monetary easing over the past two years, creating a financial environment abounding with liquidity to stimulate the economy. On the 16th of this month, the Executive Yuan (the Cabinet) approved the Ministry of Finance and the CBC to coordinate financial institutions in allocating an extra NT$300 billion to the Preferential Loans and Credit Guarantees for Traditional Industries. The CBC encourages domestic enterprises to apply.

3.The strengthening of the US dollar has intensified fluctuations in international foreign exchange markets. In cases when seasonal or irregular factors or irrational expectations result in excessive volatility in the exchange rate, the CBC will step in, as deemed appropriate, to maintain the dynamic stability of the NT dollar exchange rate.

4.Small and medium-sized enterprises(SMEs)have made a significant contribution to the domestic economy whether in terms of the number of companies, the number of employed persons, the sales volume, or the export value. To boost the economy, the CBC urges banks to actively assist SMEs in obtaining working capital. To alleviate the credit risk faced by banks, the Small and Medium-sized Enterprise Credit Guarantee Fund should be expanded both in net worth and functions. In addition, relevant agencies should enhance the diagnosis and supervision over the business and finance of SMEs to strengthen their health.

5.In the face of rapidly changing international political and economic scenes, the CBC keeps a close watch over the factors affecting risks and will prudentially monitor economic and financial developments both at home and abroad and adopt appropriate measures when necessary.