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Central Bank of the Republic of China


Financial Conditions (July 2001)

Central Bank of China

PRESS RELEASE Release Date: August 24, 2001



Monetary Aggregates For the month of July 2001, the annual growth rates of the monetary aggregates M1A, M1B and M2, measured on a daily average basis, were -5.97%, -2.72%, and 6.34%, respectively, all higher than those recorded in the previous month. The annual growth rate of M1B continued to show a negative figure, mainly due to the significant decrease in the giro accounts for stock settlements, when compared to a year earlier. The rising M2 growth rate was mainly attributed to the continuous growth of loans and investments, and increase in banks' net foreign assets. For the first seven months of this year, M2 exhibited an average annual growth rate of 5.87%, which was within the target range(5 % to 10%).

Deposits and Loans & Investments At the end of July, the annual growth rate of total deposits in major financial institutions, including monetary institutions and the Postal Savings System, rose to 6.44% from 6.16% at the end of June. The annual growth rate of total loans and investments also went upward from 0.89% to 1.08%, largely because of the increase in banks' purchase of short-term bills. 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 4.31% for the month.

Call-loan Rate and Reserve Conditions In spite of the maturity of the Bank's repurchase agreements, the Treasury's short-term borrowing from banks, the issues of government bonds, as well as the placement of tax in the Treasury account with the Bank, the average overnight call-loan rate for the month continued to trend downward from 3.895% in June to 3.686%. This was influenced by the disbursement of the interest payment on government bonds, government subsidies and tax redistribution fund, and the maturity of the Bank's certificates of deposit. For the month as a whole, the average free reserves of depository institutions and the Postal Savings System were NT$14.4 billion.