Central Bank of China

PRESS RELEASE Release Date: February 26, 2002




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Financial Conditions (January 2002)

Monetary Aggregates For the month of January 2002, the annual growth rates of the monetary aggregates M1A, M1B and M2, measured on a daily average basis, were -2.24%, 10.96%, and 3.90%, respectively. M1A growth dropped from the figure recorded in the previous month, mainly attributed to the previous year's higher base, as a result of the significantly increasing currency demand with Chinese lunar new year falling on the corresponding month. M1B growth continued to rise, largely due to the robust transactions in the stock market, and a shift of time deposits to demand deposits as interest spread between time deposits and demand deposits narrowed. However, M2 growth went down mainly due to the higher base of the corresponding month of the previous year, and the slowing growth of loans and investments, as well as the increasing demand for bond funds in place of bank deposits.

Deposits and Loans & Investments At the end of January, the annual growth rate of total deposits in major financial institutions, including monetary institutions and the Postal Savings System, rose to 4.63% from 4.41% at the end of the previous month, mainly owing to the previous year's lower base, as a result of a shift from deposits to currency with Chinese lunar new year falling on the corresponding month. However, the annual growth rate of total loans and investments moved downward from -1.02% at the end of the previous month to -1.78%, mainly because of the slow recovery 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 3.17% for the month.

Call-loan Rate and Reserve Conditions In spite of the issues of government bonds, the Treasury's borrowing from banks, the placement of tax and earnings of government-owned enterprises in the Treasury account with the Bank, and the increasing demand for currency as Chinese lunar new year approaching, the average overnight call-loan rate for the month continued to trend downward from 2.389% in the previous month to 2.299%. This was mostly resulting from the disbursements of the interest payment on government bonds, government subsidies, and the civil servants' year-end bonuses, which caused reserve conditions of banks to be easy. For the month as a whole, the average free reserves of depository institutions and the Postal Savings System were NT$ 12.6 billion.

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