Taiwan’s monetary supply remains healthy, and decelerating growth in April should not be a concern, the Central Bank of the Republic of China said May 26.
According to the central bank, the money aggregates M1B and M2 grew 8.17 percent and 5.88 percent, respectively, over a year ago.
M1B includes currency in circulation plus checking accounts, passbook deposits and passbook savings deposits. The indicator is often considered a major source of momentum to the stock market. M2 is the broadest measure of money supply and includes M1B and quasi-money.
Compared with the figure in March, the M1B indicator edged down 0.31 percentage points, mainly caused by the transfer of funds from demand deposits to time and savings deposits, the central bank said.
The 8.17-percent figure marks the lowest growth in M1B since April 2009, triggering concern that the downturn may signal weakening of Taiwan’s economic activity.
“The M1B indicator itself is a volatile measure, and we don’t believe its recent movements are particularly out of line,” said Chen E-dawn, deputy director-general of the central bank’s Economic Research Department.
The official explained that instead of showing a lack of confidence in the local stock market, the fund transfers primarily reflect individuals’ financial planning for their yearend bonuses, which were generally paid by firms to their demand deposit accounts.
“The M2 aggregate is also within the central bank’s policy range of between 2.5 percent and 6.5 percent,” Chen pointed out, adding that the overall money supply remains well under control. (THN)
Write to Meg Chang at meg.chang@mail.gio.gov.tw