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Financial Conditions (November 2001)

Central Bank of China

PRESS RELEASE Release Date: December 25, 2001




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Financial Conditions (November 2001)

Monetary Aggregates For the month of November 2001, the annual growth rates of the monetary aggregates M1A, M1B and M2, measured on a daily average basis, were -2.71%, 5.00%, and 5.16%, respectively. M1A and M1B growth rose from the figures recorded in the previous month, mainly attributed to the robust transactions in the stock market and an increase in demand deposits, which resulted from a narrowed interest spread between time deposits and demand deposits, and the continuous conversion of foreign currency deposits. However, M2 growth went down mainly due to the higher base of the corresponding month of the previous year, the decelerating growth of loans and investments, as well as the increasing demand for bond funds. For the first eleven months of this year, M2 exhibited an average annual growth rate of 5.89%, which was within the target range (5 % to 10%).

Deposits and Loans & Investments At the end of November, the annual growth rate of total deposits in major financial institutions, including monetary institutions and the Postal Savings System, declined to 4.79% from 5.57% at the end of October. The annual growth rate of total loans and investments also moved downward from -0.88% in October to -1.41%, mainly owing to the slowdown of the economy and weak fund demand. If loans and investments extended by life insurance companies and investment and trust companies, major financial institutions' reclassifying nonaccrual loans and writing-off bad loans, as well as funds raised directly from financial markets were taken into account, the total funds raised by non-financial sectors showed an annual growth rate of 2.62% for the month.

Call-loan Rate and Reserve Conditions In spite of the Treasury's short-term borrowing from banks, the issues of government bonds, as well as the placement of tax in the Treasury account with the Bank, the average overnight call-loan rate for the month continued to trend downward from 2.726% in October to 2.486%. This was mostly influenced by banks' easy fund condition, which resulted from the maturity of Treasury bills, the interest payment on government bonds, the tax redistribution and government subsidy disbursements, as well as the Bank lowering both the discount rate and the rate on accommodations by 25 basis points on November 8. For the month as a whole, the average free reserves of depository institutions and the Postal Savings System were NT$ 4.3 billion.

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