Capital abundant in the financial market: CBC


By John Liu, The China Post

TAIPEI, Taiwan — Monetary aggregates of M1B and M2 in March grew 8.87 percent and 5.89 percent year-on-year, respectively, largely on the back of net foreign capital inflows, the Central Bank of the Republic of China (Taiwan) said yesterday. The report into Taiwan’s financial condition showed that for the month of March, the monthly growth rates of the monetary aggregates M1B and M2, measured on a daily average basis, dipped 0.08 percent and climbed 0.46 percent, respectively — both lower than those of February. This is due to the fact that the Chinese New Year occurred in February, causing a higher capital demand and consequently a higher base period. Between January and March, the average annual growth rates of M1B and M2 were 9.14 percent and 5.82 percent, respectively. Analysts said that the “golden cross” phenomenon has lasted for 18 consecutive months, showing that there is abundant capital flowing around in the market. The average daily money base in March amounted to NT$3.1382 trillion, down NT$92.5 billion from the previous month. Circulating medium dropped NT$148.3 billion, while bank reserves grew NT$55.8 billion.

The monthly growth rate of total outstanding loans and investments of monetary financial institutions was 0.12 percent in March, lower than that of the previous month. Meanwhile, the annual growth rate dropped from 4.95 percent in February to 4.53 percent in March, mainly due to slower growth in bank claims on the private sector and government enterprises.

According to CBC, if (1) loans and investments extended by life insurance companies, (2) non-accrual loans reclassified and bad loans written off by monetary financial institutions, and (3) funds raised directly from capital markets were all taken into account, the total outstanding amount of funds raised by the non-financial sector would show an annual growth rate of 4.77 percent, lower than the 4.92 percent registered in the previous month.