Thu, Jul 26, 2012 - Page 13 News List

Growth in money supply slows amid economic turmoil

By Amy Su  /  Staff reporter

The annual growth rate in the M1B monetary aggregate for last month marked the second-lowest level since February 2009 due to lower domestic investment amid economic uncertainty, the central bank said yesterday.

M1B — a narrow measurement of money supply in circulation, including currency and passbook savings deposits — rose 3.18 percent last month from the previous year, lower than the 3.24 percent growth posted in May, the bank said in a report.

The broader M2 monetary aggregate — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 4.4 percent year-on-year last month, slower than the 4.72 percent growth posted the previous month. It marked the lowest level of growth since July 2010, the bank said.

“The slowing growth rates of both M1B and M2 last month were mainly due to lower expansion in bank loans and investment,” Chen E-dawn (陳一端), deputy head of the bank’s economic research department, said yesterday.

Net foreign capital outflow of US$344 million was another factor dragging down last month’s growth, Chen said, while foreign-held New Taiwan dollar deposits also dropped NT$1.9 billion (US$62.9 million) to NT$204.3 billion last month, she added.

Chen said the annual growth rate in M1B may continue to narrow this quarter because of a higher comparison base in the second half of last year.

Meanwhile, the outstanding balance held in securities accounts dropped NT$41.8 billion month-on-month to NT$1.207 trillion, the lowest level since June 2010, reflecting investors’ continued conservatism toward the stock market.

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