Taiwan's money supply growth rose in Dec. 2004

Taipei, Jan. 28, 2005 (CENS)--Taiwan's three money supply indicators-- M1A, M1B, and M2, recorded higher annual growth rates in December 2004 than one month earlier, standing at 14.77%, 14.35%, and 7.31%, respectively, according to the statistics released by Central Bank of China (CBC) here.

M1A refers to currency in circulation, checking accounts and passbook deposits; M1B is M1A plus passbook savings deposits; and M2 is M1B plus quasi-money, including time and savings deposits, foreign currency deposits, and postal savings deposits, etc.

Shih Yen, director general at CBC's Economic Research Department, attributed the growth to the considerable rise in loans and investments recorded by banks. Besides, postponed redemption of bond funds also fueled the growth of the island's money supplies.

CBC's statistics showed that as of December 2004, bond funds stood at NT$1.8833 trillion (US$55.39 billion at US$1 = NT$34), down NT$41.2 billion (US$1.2 billion) or 2.14% from NT$1.9245 trillion (US$56.6 billion) recorded a month earlier. Compared to the corresponding figures of NT$126.6 billion (US$3.7 billion) in 2003 and NT$52.3 billion (US$1.54 billion) in 2002, the decline of NT$41.2 billion (US$1.2 billion) in 2004 was relatively smaller.

In the same month, the annual growth rate of loans and investments recorded by the banking system, including Remittances & Savings Department of Changhwa Post Co., edged up by 0.42 of a percentage point from the preceding month to 8.61%, the highest of its kind since December of 1998.

Shih explained that capital is often badly needed by both enterprises and individual consumers during the holiday season in the fourth quarter of last year, pushing up outstanding loans extended by banks. As of the end of December 2004, the accumulated consumer loans reached NT$17.95 trillion (US$527.94 billion). Loans and investments offered by non-financial institutions, including life insurance companies and investment trust firms plus bad loans erased by major financial institutions, recorded annual growth of 8.14% last December, lower than 8.38% posted a month earlier.