Central Bank of China

PRESS RELEASE Release Date: September 25, 2001




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Financial Conditions (August 2001)

Monetary Aggregates For the month of August 2001, the annual growth rates of the monetary aggregates M1A, M1B and M2, measured on a daily average basis, were -5.45%, -1.44%, and 6.48%, respectively, all of which rose from the figures recorded in the previous month, mainly attributed to the significant increase in net inflows of foreign exchange proceeds from trade. Although M1B continued to show a negative annual growth rate, mainly due to the large decrease in the giro accounts for stock settlements from a year earlier, the negative growth of M1B has steadily narrowed in scale since May. For the first eight months of this year, M2 exhibited an average annual growth rate of 5.95%, which was within the target range(5 % to 10%).

Deposits and Loans & Investments At the end of August, the annual growth rate of total deposits in major financial institutions, including monetary institutions and the Postal Savings System, mildly declined to 6.32% from 6.47% at the end of July. The annual growth rate of total loans and investments went down from 1.14% in July to 0.14%, mainly owing to the slowdown of the economy and weak fund demand from enterprises. 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 3.76% for the month.

Call-loan Rate and Reserve Conditions The average overnight call-loan rate for the month continued to trend downward from 3.686% in July to 3.513%. This was mostly influenced by banks' easy fund condition, which resulted from the maturity of Treasury bills, a continuous shift from foreign currency deposits to NT dollar deposits, the interest payments on government bonds and tax redistribution disbursements, as well as the Bank lowering the discount rate, the rate on accommodations with collateral and the rate on accommodations without collateral by 25 basis points to 3.250%, 3.625% and 5.50%, respectively, on August 20. For the month as a whole, the average free reserves of depository institutions and the Postal Savings System were NT$2.5 billion.

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