Central Bank of China

PRESS RELEASE Release Date: August 26, 2002




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Financial Conditions (July 2002)

Monetary Aggregates For the month of July 2002, the annual growth rates of the monetary aggregates M1A, M1B and M2, measured on a daily average basis, were 10.76%, 20.01%, and 3.29%, respectively. The M2 aggregate plus bond funds held by the general public posted an annual growth rate of 5.77% for the month. M2 growth fell from the figure recorded in the previous month mainly due to the sharper appreciation of the NT dollar from the corresponding month last year resulting in the rapidly shrinking book balance of foreign currency deposits in NT dollar terms, the decelerating growth of loans and investments, as well as the successively increasing demand for bond funds in place of bank deposits, which curbed bank's credit creation function. For the first seven months of this year, M2 exhibited an average annual growth rate of 4.12%.

Direct and Indirect Finance At the end of July, the annual growth rate of total loans and investments in major financial institutions, including monetary institutions and the Postal Savings System, fell to "4.69%. The growth rate declined mainly due to the weak demand for funds from enterprises, resulting in the marked decrease in banks' loans to private enterprises for current operations. If loans and investments extended by life insurance companies and investment and trust companies, major financial institutions' reclassifying non-accrual 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 2.26% for the month.

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