Central Bank of China

PRESS RELEASE Release Date: October 25, 2001




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Financial Conditions (September 2001)

Monetary Aggregates For the month of September 2001, the annual growth rates of the monetary aggregates M1A, M1B and M2, measured on a daily average basis, were -4.74%, 0.29%, and 6.19%, respectively. M1A and M1B growth rose from the figures recorded in the previous month, mainly attributed to a significantly narrowed interest spread between time deposits and demand deposits, as well as a shift from foreign currency deposits to NT dollar demand deposits. However, M2 growth went down mainly due to the September 11 terrorist attacks in the U.S. and typhoon damages, which caused domestic and external demand to weaken and hence loans & investments and net foreign exchange proceeds from trade to decrease as compared with the previous month. For the first nine months of this year, M2 exhibited an average annual growth rate of 5.97%, which was within the target range (5 % to 10%).

Deposits and Loans & Investments At the end of September, the annual growth rate of total deposits in major financial institutions, including monetary institutions and the Postal Savings System, mildly declined to 6.15% from 6.31% at the end of August. The annual growth rate of total loans and investments went down from 0.20% in August to -0.46%, 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 3.47% for the month.

Call-loan Rate and Reserve Conditions The average overnight call-loan rate for the month continued to trend downward from 3.513% in August to 3.173%. This was mostly influenced by the maturity of the Bank's certificates of deposit, a continuous shift from foreign currency deposits to NT dollar deposits, and the interest payments on government bonds, as well as the Bank lowering the discount rate, the rate on accommodations with collateral and the rate on accommodations without collateral by 50 basis points to 2.75%, 3.125% and 5%, respectively, on September 19. For the month as a whole, the average free reserves of depository institutions and the Postal Savings System were NT$4.7 billion.

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