Taiwan's Money Supply Indicators Trend Downward in December 2013

The annual growth of Taiwan's two major money supply indicators—M1B and M2—both fell to 8.5% and 5.75%, respectively in December 2013; and the former grew on average in 2013 by 7.27% and the latter by 4.78%, according to the central bank.

The central bank assesses money supply based on three monetary parameters—M1A, M1B and M2. M1A shows currency in circulation, checking accounts, and passbook deposits; M1B is M1A plus the passbook savings deposits; and M2 is M1B plus quasi-money, including time and savings deposits, foreign currency deposits, and postal savings deposits.

Y. T. Chen, deputy director general at the central bank's Economic Research Department, indicates that as of the end of December 2013 the cumulative deposits held by Taiwan's financial institutions amounted to NT$35 trillion (US$1.17 trillion) for a monthly increase of NT$127 billion (US$4.23 billion) and yearly increase of NT$1.76 trillion (US$58.67 billion). In the same period, the deposits of M1B hit a record high of NT$13.3 trillion (US$443.33 billion).

In the same month the outstanding value of stock accounts chalked up by NT$10.4 billion (US$346.67 million) from a month earlier to hit a record high of NT$1.3 trillion (US$433.33 billion), implying that abundant capital can be funneled in the stock market here.

Chen says that the shrinkage in annual growth of M1B and M2 in December was due mainly to the decline in investment and loans extended by domestic banks, whose annual growth  shrank to 4.62% from 5.66% of a month earlier. Besides, the loans offered to government plunged to NT$4.3 billion (US$143.33 million) in 2013 from NT$128 billion (US$4.27 billion) in 2012. (JL)