The central bank yesterday set interest rates at 1 percent to 1.5 percent for funds to aid small and medium-sized enterprises (SMEs) hit by the COVID-19 pandemic, in an attempt to ward off a credit crunch.
The aid program, tentatively set at NT$200 billion (US$6.6 billion), as the monetary policymaker promised last week, would be available from April 1 and continue through the next 12 months to prevent cash-strapped firms from shutting operations and laying off workers, Department of Banking Director-General Chen E-dawn (陳一端) told a media briefing last night.
Central bank Governor Yang Chin-long (楊金龍) said on Thursday last week that the bank would meet with local financial institutions to work out lending terms in a timely manner.
Photo: Reuters
The liquidity injection and a rate cut of 25 basis points are the bank’s response measures to help local firms and households withstand the virus outbreak, which has wreaked havoc on airlines, travel agencies, hotels, retail stores and recreational facilities.
The bank caps borrowing costs at 1 percent for special loans of up to NT$2 million and no more than 1.5 percent for loans of up to NT$6 million, Chen said, adding that the program might go in conjunction with other government-backed relief and stimulus measures.
“Companies with cash needs may take out loans and lenders should be supportive to meet their social responsibility” at a difficult time, Chen said.
While the market remains awash with liquidity, the pace of growth has slowed, as money supply data released yesterday showed, the bank said.
The narrow money supply gauge of M1B, which refers to cash and cash equivalents, last month increased 7 percent from a year earlier, slowing from growth of 7.61 percent in January, the bank said.
The broad measure of M2, which includes savings deposits, time savings deposits, foreign-currency deposits and M1B, showed a similar trend, with a 4.35 percent pickup, compared with 4.6 percent in January, the data showed.
Capital flight from the local bourse and the New Taiwan dollar accounted for the slowdown, the bank said.
Savings deposits by foreign funds stood at NT$170.1 billion last month, the lowest since July 2017 following capital outflows of US$3.89 billion, it said.
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