Central Bank of China

PRESS RELEASE Release Date: Sept. 26, 2001




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MONETARY POLICY DECISIONS OF THE BOARD MEETING

(Sept. 26, 2001)

In line with the deliberations made at the Board meeting on September 26, the future directions for monetary policy of the Central Bank of China (CBC) shall be the following:

1. As the bleak international conditions are likely to magnify volatility in international financial markets, the CBC, in accordance with the mandate delegated to it by the Central Bank of China Act, shall be devoted to maintaining the stability of financial markets. In cases when the foreign exchange market is disrupted by seasonal or irregular factors, or irrational expectations, the Bank will step in to maintain the stability of the NT dollar exchange rate.

2. The CBC cut the discount rate by 50 basis points, effective from September 18, and encouraged banks to slash their lending rates in line with the lower cost of funds. The action was taken to stimulate private consumption and investment.

3. In the wake of Typhoon Nari, the CBC injects ample liquidity into the economy to meet the fund demand for the rehabilitation work. The CBC also asks financial institutions which are entrusted with relevant responsibilities to fully assist in the reconstruction work of the damaged area.

4. The CBC will continue to monitor developments in global and domestic financial markets closely and adopt appropriate measures in a timely manner. The objective is to ensure domestic financial stability and help promote economic growth.