Central Bank of China

PRESS RELEASE Release Date: May 6, 2004




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1. Taiwan banks have recently been asked to pay higher interest rates in the Singapore inter-bank borrowing market. For example, Taiwan banks are paying 22.5 basis points more than their Japanese and US counterparts for loans with one month to maturity. This seems unreasonable.

2. Taiwan's current account and overall balance of payments have both been in surplus for many years. By the end of April 2004, the level of Taiwan's foreign exchange reserves had reached US$227.6bn, while Taiwan's external debt remains negligible.

3. Following a series of financial reforms carried out by the government in recent years, the average non-performing loans ratio of Taiwan banks has fallen from 8.26% in November 2001 to 4.14% in March 2004. As a result, the asset quality of Taiwan banks has improved noticeably.

4. International rating agencies all regard Taiwan as good credit, for long-term foreign currency rating, Taiwan is assigned Aa3 from Moody's and AA- from Standard & Poor's, among the best in Asia.

5. We registered a 3.2% economic growth last year. Lehman Brothers forecasts that the growth rate for this year will be 6.0%, and Goldman Sachs's forecast is even higher at 6.3%.

6. The above analysis shows that the creditworthiness of Taiwan is excellent, and financial institutions in Singapore surely have no grounds to add premiums to the borrowing of our banks.

7. The Central Bank of China will consult with local banks, and is ready to provide sufficient funds to them.