Modifications on the Categorization of Financial Institutions and Definition of the Monetary Aggregate M2
Central Bank of the Republic of China (Taiwan)
PRESS RELEASE Release Date: February 20, 2012
Modifications on the Categorization of Financial Institutions and Definition of the Monetary Aggregate M2
Beginning with the February 2012 issue, the categorization of financial institutions and the definition of the monetary aggregate M2 in the CBC’s Financial Statistics Monthly will be modified, taking notice of the IMF categorization of financial institutions and the reclassification of structured products as required by Financial Supervisory Commission (FSC) in Taiwan. More details are described in the following.
1. Categorization of financial institutions
The financial institutions in the Financial Statistics Monthly will be re-grouped in order to modify the representation of financial statistics. Before the modification, the Financial Statistics Monthly presents data on the consolidated assets and liabilities of financial institutions in four groups, including Deposit Money Banks, Monetary Institutions, Major Financial Institutions and Financial Institutions. After the modification, the data will be presented in three groups: Other Monetary Financial Institutions, Monetary Financial Institutions and Financial Institutions (see Annex Table for comparison). This modification takes into consideration the norms and grouping of financial statistics compilation in the IMF and major economies, and better reflects Taiwan’s situation in financial services practices. This modification applies to all relevant data for the Financial Statistics Monthly collected since January 1997.
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New：
2. Definition of the monetary aggregate M2:
Since banks began to issue structured products in early 2001, the carrying values of the host contracts have been classified as banks’ deposits, which is by definition a component of the monetary aggregate M2. However, structured products carry higher liquidity risk and market risk and, unlike deposits, do not necessarily guarantee the return of principal. For these reasons, such products will be removed from the components of the M2.
Pursuant to the Official Letter by the FSC, released in October 2010, requesting banks to exclude structured products from deposits, the CBC’s Financial Statistics Monthly will, beginning from the February 2012 issue, modify the M2 definition by removing the carrying values of the host contracts of structured products from deposits. This modification applies to all relevant data collected since January 2001.
Annex Table – Modification on Categories of Financial Institutions of Financial Statistics Monthly
Existing |
New (Effective from Feb. 2012 Issue) |
Notes | ||
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Table No. |
Category of Financial Institutions |
Table No. |
Category of Financial Institutions |
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8 |
Central Bank |
8 |
Central Bank |
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9 |
Deposit money banks: 1. Domestic banks 2. Local branches of foreign banks 3. Medium business banks 4. Credit cooperative associations 5. Credit departments of Farmers’ and Fishermen’s Associations
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9 |
Other monetary financial institutions: 1. Domestic banks 2. Local branches of foreign banks 3. Credit cooperative associations 4. Credit departments of Farmers’ and Fishermen’s Associations 5. Chunghwa Post Co. 6. Money market mutual funds
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1. Medium Business Banks will henceforth be categorized as part of Domestic Banks. 2. Chunghwa Post Co. and money market mutual funds are to be included in data of Other Monetary Financial Institutions, to reflect the IMF categorization and the practice of financial services in Taiwan.
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10 |
Monetary institutions: 1. Central Bank 2. Deposit money banks |
10 |
Monetary financial institutions: 1. Central Bank 2. Other monetary financial institutions |
In the new edition, Monetary Financial Institutions are the existing Monetary Institutions plus Chunghwa Post Co. and Money Market Mutual Funds. |
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11 |
Major financial institutions: 1. Monetary institutions 2. Chunghwa Post Co. 3. Money market mutual funds |
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In the new edition, Table 10 replaces the existing Table 11. |
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12 |
Financial institutions: 1. Major financial institutions 2. Trust and investment companies 3. Life insurance companies |
11 |
Financial institutions: 1. Monetary financial institutions 2. Trust and investment companies (before Dec. 2008) 3. Life insurance companies
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In the new edition, Table 11 replaces the existing Table 12. |