Annual growth in M1B and M2 money supply dropped last month, as the government-run Taiwan Insurance Guaranty Fund (TIGF, 保險安定基金) transferred a deposit to a local life insurer, which is not included in the monetary aggregates, the central bank said yesterday.
Transglobe Life Insurance Co (全球人壽) received a subsidy of NT$88.37 billion (US$2.94 billion) from the TIGF last month to cover losses from the insolvent Kuo Hua Life Insurance Co (國華人壽), which dragged down money in circulation, Chen E-dawn (陳一端), deputy head of the bank’s economic research department, told a media briefing.
Nonetheless, money in circulation was still enough to satisfy demand and support economic activities, the bank said.
M1B, a narrow measure of the money in circulation, including currency and passbook savings deposits, rose 5.72 percent from a year ago, the bank said in its monthly report. That compares with a 6.03 percent year-on-year increase in March, it said.
The broader M2 monetary measurement — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 3.71 percent year-on-year last month, slightly lower than the annual increase of 3.78 percent in March, the report said.
“This was mainly because bank loans and investments grew slower [last month],” Chen said.
Foreign exchange deposits reached a record NT$3.635 trillion last month, up NT$47.2 billion from March, as Taiwanese raised their holdings of yuan-dominated deposits, the report’s data showed.
For the first four months of the year, M1B and M2 money supply grew by 5.34 percent and 3.5 percent respectively from a year ago.