Annual Report 2021

Central Bank of the Republic of China (Taiwan)

Taipei, Taiwan
Republic of China
Foreword

Chin-Long Yang, Governor

Entering the year of 2021, progress in vaccination campaigns led many major

economies to gradually lift COVID-19 restrictions, helping economic and trade

activity to return to a more normal state and galvanizing the global economic

recovery. Against this backdrop, Taiwan's exports and private investment were

robust and the overall economic growth accelerated from 3.36% the previous year

to 6.45%, the fastest in nearly eleven years. Meanwhile, in addition to a lower base

effect, the annual growth rate of consumer price index (CPI) was also pushed up

by rising raw material prices including crude oil and by weather-induced price

hikes in food items such as fruit and vegetables, climbing from a negative 0.23% in

2020 to a positive 1.96% in 2021. Excluding fruit, vegetables, and energy, core CPI

inflation remained mild, with the annual growth rate reaching 1.33% compared to

the previous year's 0.35%.

Against this backdrop, the Bank continued with efforts to fulfill its legal

mandates. When the domestic COVID-19 cases flared up around mid-year, the

Bank, supported by a rolling review, made several adjustments to its special

accommodation facility to keep credit flowing and make borrowing more

affordable for the pandemic-hit small and medium-sized enterprises, including

extending the applicable duration of preferential interest rates, expanding the size

of total accommodation, postponing the application deadline, and allowing a

second draw of such a loan. When the banking sector continued racking up real

estate loans, the Bank reinforced the selective credit control measures introduced

in December 2020 for another three rounds to stem excessive credit flows into the

housing market and further rein in credit risk thereof, successfully slowing the growth

in construction and house-purchasing loans and bolstering banks' real estate credit

quality.

The Bank also continued to flexibly manage market liquidity through open

market operations. In 2021, bank loans and investments showed an annual growth

rate of 7.65% and the monetary aggregate M2 increased by 8.72% year on year. As

both figures were higher than the GDP growth rate of 6.45%, the financial system

held ample liquidity, sufficient to support economic activity.

Meanwhile, the Bank stayed committed to the statutory objective of

safeguarding the value of the NT dollar. For the first half of 2021, excess supply

of the US dollar (USD) in the domestic forex market strengthened the NT dollar

(NTD) and amplified exchange rate volatility, whereas more balanced USD supply

and demand in the second half of the year kept the NTD-USD exchange rate

within a tight range. When the NT dollar exchange rate experienced heightened

volatility, the Bank stepped in with smoothing operations as needed to maintain

the currency's dynamic stability, with a total of US$9.1 billion net purchases for the

year as a whole. At the end of 2021, the Bank held US$548.4 billion worth foreign

exchange reserves, representing a year-on-year increase of US$18.5 billion owing

mainly to returns from forex reserves management and smoothing operations to

address the effect of massive and erratic cross-border capital flows.

The Bank also took note of a marked increase in interbank retail payment

transactions and the opening of internet-only banks in Taiwan. In response, the Bank

now allowed a higher share – up from 8% to 16% – of banks' required reserves to

come from the end-of-day balance of their funds deposited in the central bank's

Interbank Funds Transfer Guarantee Special Accounts, thereby facilitating banks'

liquidity needs for payment settlement. Moreover, we recognized the importance of

better interconnectedness for cross-institution flows of data and funds, including the

flows among electronic payment (e-payment) institutions and those between them

and financial institutions. To that end, the Bank urged the Financial Information

Service Co., Ltd. (FISC) to set up the "shared platform for cross-institution electronic

payment," which began to provide funds transfer services from October 2021. With

the e-payment institutions all joining this platform, payment market efficiency has

further improved.

The Bank also carried on with its work to explore a potential central bank

digital currency (CBDC). We already found through the first phase research

completed in June 2020 on the feasibility of a wholesale CBDC that the distributed

ledger technology (DLT) has its downsides, particularly in that the DLT application

remains inadequate to satisfy the need for real-time, high-frequency, large-volume

payment transactions. Currently, the second phase proof-of-concept study is well

underway, with a pilot platform to simulate and test the CBDC's capabilities in retail

payment scenarios. The study is expected to conclude in September 2022, and the

findings will be disclosed in due course to invite discussion and public comments as

part of the Bank's further evaluation for issuing a CBDC.

Another highlight in recent years was enhanced communication with the

public via a website revamp in 2020, using the responsive web design technology

to provide improved viewer experience across devices and web accessibility. The

revamp also ushered in the Monetary and Financial Knowledge Hub (in Chinese

Only) to serve as a reliable source of monetary and financial knowledge. In

October 2021, the Bank also asked colleges and universities to promote the Hub to

broaden its reach.

Looking ahead, uncertainties compounded by global geopolitical tensions,

recurring pandemic waves induced by new coronavirus variants, worsening climate

change, and surging international commodity prices would continue to weigh on

the world's economic development and financial stability. The Bank will continue

to closely monitor and assess the economic and financial conditions at home and

abroad. Based on the assessment and committed to its legal mandates, the Bank

will take actions to preserve order in the forex market and dynamic stability of the

NT dollar exchange rate, and to adjust monetary and credit policies as needed.

The Bank was also mindful of a recent array of regulatory issues around the world

resulting from fast-growing digital currencies and crypto-assets and will keep close

watch on these developments and their implications for financial stability.

Finally, I would like to thank my colleagues for their hard work in producing this

publication, which outlines the Bank's efforts as well as economic and financial

overviews for the year of 2021. Going forward, we remain devoted to fulfilling our

duties and addressing the challenges.

Chin-Long Yang
Governor
March 2022
CONTENTS
CBC Annual Report 2021

Organization and Management of the CBC 1

I. Developments in the Real Economy 5

1. Overview 6
2. National Output and Income 9
3. Balance of Payments 14
4. Prices 20
5. Labor Market24

II. Financial Developments 29

1. Overview 30
2. Banking Sector 33
3. Money Market 42
4. Foreign Exchange Market 47
5. Stock Markets 54
6. Bond Market 60
III. Central Bank Operations 65

1. Overview 66
2. Monetary Management 68
BOX Selective Credit Control Measures: Implementation and Results 73

3. Foreign Exchange Management 80

4. Payment and Settlement Systems 87
5. Currency Issuance 93
6. Fiscal Agency Functions 98
7. Financial Inspection 100
8. Participation in International Activities103

Chronology of Events of the CBC in 2021 105

Financial Statements of the CBC 110

1. Balance Sheet 110
2. Income Statement110

Key Economic and Financial Indicators of the Republic of

China (Taiwan) 111

Appendix: Central Bank of The Republic of China (Taiwan) Website114

Abbreviations 119
CBC Annual Report 2021

Organization and Management of the CBC

Alan R.Y. Pan

Department of Banking
(Director General)

Board of Directors
Yen-Dar Den
Department of Issuing
Chairman Chin-Long Yang (Director General)
Executive Directors Jain-Rong Su
Mei-Hua Wang Chiung-Min Tsai
Tzung-Ta Yen Department of Foreign Exchange
(Director General)
Nan-Kuang Chen
Chung-Dar Lei
Pei-Jen Heh
Directors Chi-Chung Chen Department of the Treasury
(Director General)
Chao-Yih Chen
Fu-Sheng Hung
Yi-Ting Li Dou-Ming Su
Department of Financial Inspection
(Director General)
Jin-Lung Lin
Shi-Kuan Chen
Chao-Hsi Huang Yih-Jiuan Wu
Department of Economic Research
Chien-Yi Chang (Director General)
Shiu-Sheng Chen

Chien-Ching Liang
Secretariat
(Director General)

Shu-Hui Kuo
Department of Accounting
(Director General)
Governor
Chin-Long Yang Department of Information Rey-Shyun Lee
Management (Director General)
Deputy
Governors Shu-Hui Chang
Personnel Office
(Director)
Tzung-Ta Yen
Nan-Kuang Chen
Wen-Ching Wang
Ethics Office
(Director)

Kun-Shan Wu
Legal Affairs Office
(Director)

Board of Supervisors Wei-Sheng Chiu

New York Representative Office
(Representative)
Chairman Tzer-Ming Chu
Supervisors Ching-Fan Chung
Wei-Chuan Chang
Sheng-Yao Lin London Representative Office
(Representative)
Tien-Wang Tsaur
Kuei-Hui Cheng
Central Engraving & Chia-Sheng Yu
Printing Plant (President)

Sheng-Shang Chou
Central Mint
(Director)

direct reporting supervision As of January 2022

1
 CBC Annual Report 2021

Chairman
Board of Directors
Governor
Chin-Long Yang

Executive Director Executive Director Executive Director

Jain-Rong Su Mei-Hua Wang Deputy Governor
Tzung-Ta Yen

Executive Director Executive Director

Deputy Governor Chung-Dar Lei
Nan-Kuang Chen

2
CBC Annual Report 2021

Director Director Director

Chi-Chung Chen Chao-Yih Chen Fu-Sheng Hung

Director Director Director

Yi-Ting Li Jin-Lung Lin Shi-Kuan Chen

Director Director Director

Chao-Hsi Huang Chien-Yi Chang Shiu-Sheng Chen

3
 CBC Annual Report 2021

Chairman
Board of Supervisor
Tzer-Ming Chu

Supervisor Supervisor
Ching-Fan Chung Sheng-Yao Lin

Supervisor Supervisor
Tien-Wang Tsaur Kuei-Hui Cheng

4
CBC Annual Report 2021

Developments in
the Real Economy

5
 I. Developments in the Real Economy

I. Developments in the Real Economy

1. Overview

2021 marked the year when Taiwan recorded the fastest pace of economic growth since 2011,
as robust growth in private investment and exports and a pickup in government spending helped
the economy to expand by 6.45% from the 3.36% registered the year before. Meanwhile, Taiwan
maintained a healthy balance of payments, including a continued current account surplus and a
net asset increase in the financial account. The consumer price index (CPI) rose by 1.96%, the largest
annual increase since 2009 owing to higher fuel and lubricant fees shored up by international crude
oil price surges, rises in airfares and fruit and vegetable prices, and a lower base effect. The core
CPI (excluding fruit, vegetables, and energy) showed a mild increase of 1.33%. The labor market
was dampened by a surge in domestic COVID-19 infections around the middle of the year that hit
services sector jobs with a tightening of containment measures. The unemployment rate went up to
3.95%, the highest since 2015, whereas non-farm monthly real earnings per worker still posted a 0.96%
increase, taking it to a historical high of NT$53,445.

Robust Economic Growth

In the first quarter of 2021, exports and private investment both gathered steam amid a global
economic recovery and strong demand for emerging technology applications, while private
consumption rebounded and government spending picked up steadily. Combined, they helped
drive the economic growth rate towards an all-year high of 9.20%. In the following two quarters,
despite the continued expansion in exports and private investment, a domestic COVID-19 flare-up
in mid-May dragged private consumption into negative growth, thus slowing down the economic
expansion to a pace of 4.37% for the third quarter. In the fourth quarter, though, private consumption
was reinvigorated by the lifting of pandemic restrictions after the outbreak eased and also boosted
by the government's consumption stimulus measures. The rebound, along with continued export and
private investment growth, brought about a faster economic expansion at 4.86% year on year. For
the year as a whole, Taiwan's economy posted an annual growth rate of 6.45%, significantly higher
than the previous year's 3.36%.

Among the GDP expenditure components, domestic demand played the key role in driving
economic growth in 2021. With a faster pickup in fixed capital formation – fueled by increases in
tech giants' capital outlays and continued progress in infrastructure projects to facilitate green
energy and 5G network development – and a mild expansion in government spending, domestic
demand contributed 4.55 percentage points to the GDP growth, higher than the 0.68 percentage

6
CBC Annual Report 2021

point contribution the previous year. Regarding external demand, in addition to solid export growth,
imports were also spurred markedly by derived demand from exports and investment as well as
surging international raw material prices. On balance, the contribution from net foreign demand
shrank to 1.90 percentage points from 2.67 percentage points the previous year.

The domestic investment rate (gross domestic investment to GDP) rose from 24.19% a year
before to 26.85% in 2021, a record high unseen since 2001, thanks to a significant expansion in
private investment. By contrast, a slump in private consumer spending amid domestic COVID-19
outbreaks led the national saving rate (gross national saving to gross national income) to rise from
38.39% a year ago to 42.22%. Overall, with national saving rising faster than domestic investment, the
excess saving rate (the difference between saving and investment as a percentage of GDP) went
up from 15.31% in 2020 to 16.19% in 2021.

Healthy BOP Surplus

In 2021, Taiwan continued to record a healthy balance of payments. The current account posted
a surplus of US$116,123 million, the financial account had a net asset increase of US$104,604 million,
and the Bank's reserve assets showed an increase of US$20,993 million.

On the current account, goods imports and exports both registered strong growth, with
exports increasing more than imports. This led the goods trade surplus to rise from the previous
year's US$75,028 million to US$90,120 million, accounting for the largest contribution to the
widening of the current account surplus. The services account surplus climbed to a historical
high of US$12,314 million from the previous year's US$3,754 million, mainly bolstered by a surge in
freight proceeds. The primary income surplus shrank from US$19,328 million to US$16,390 million,
reflecting a decrease in banks' interest income and an increase in payments for nonresidents'
portfolio investment income. The secondary income deficit narrowed from US$3,154 million to
US$2,701 million. For the year of 2021, the ratio of current account surplus to nominal GDP rose
from the 14.2% of the previous year to 15.0%.

On the financial account, portfolio investment recorded a net asset increase of US$101,281 million.
Among the components, residents' portfolio investment abroad increased by a net amount of
US$81,194 million, mainly because domestic insurers and banks stepped up holdings of foreign
securities. Inward portfolio investment by nonresidents posted a net decrease of US$20,087 million,
mainly because foreign investors shed their local stock holdings. Direct investment registered a net
increase of US$4,703 million, of which direct investment abroad by residents declined to
US$10,108 million and nonresidents' inward direct investment also dropped to US$5,405 million. In
terms of other investment, it posted a net asset decrease of US$1,094 million.

7
 I. Developments in the Real Economy

Rising Inflation

Internationally, global demand was boosted by economic reopening in many countries as the
vaccination coverage increased, while raw material prices were pushed up by persisting supply
chain bottlenecks. These external factors and a lower base effect combined to result in a 9.44%
year-on-year rise in Taiwan's wholesale price index (WPI), the largest annual increase since 1981. Of
the components, imported goods, domestic sales excluding imports, and exported goods recorded
price rises of 10.53%, 12.24%, and 6.54%, respectively.

Meanwhile, the CPI annual growth rate reached 1.96%, a record high since 2009, mainly
owing to supply-side factors such as price surges in fuel and lubricants, flight tickets, and fruit and
vegetables, as well as a lower base effect. The core inflation was still mild, rising by 1.33% year on
year.

Higher Unemployment Rate and Moderate Wage Growth

In the middle of May 2021, the domestic coronavirus flare-up triggered a level-3 alert with
a tightening of containment measures. The labor market took a hit, with the unemployment
rate rising from the 3.66% early in the year to 4.80% in June. As the outbreak came under
control and the related restrictions were eased, the unemployment rate trended downwards
and reached 3.64% in December, bringing the all-year average to 3.95%, albeit still the highest
since 2015. The average labor force participation rate slid by 0.12 percentage points to 59.02%,
declining for two years in a row.

The average number of employed persons decreased by 57 thousand, or 0.49%, to 11,447 thousand.
The services sector suffered the greatest loss owing to the pandemic, losing 32 thousand persons in
employment, or 0.47%, compared to the previous year. Employment of the industrial and agricultural
sectors decreased by 17 thousand, or 0.43%, and by 6 thousand, or 1.13%, respectively.

In terms of wages, the average non-farm (industrial and services sectors) monthly earnings per
employee increased by 2.94% year on year to NT$55,754, where the industrial sector saw a 5.82%
increase and the services sector only recorded a 0.95% rise. Adjusted for inflation, real monthly
earnings still climbed to a historical high of NT$53,445, up by 0.96% from a year ago. Meanwhile, as
growth in production far exceeded growth in total working hours, labor productivity indices of the
industrial sector and the manufacturing industry exhibited significant year-on-year rises of 11.72% and
12.51%, respectively. Meanwhile, unit labor costs decreased by 5.73% in the industrial sector and 6.26%
in the manufacturing sector, reflecting smaller gains in total earnings than those in production.

8
CBC Annual Report 2021

2. National Output and Income

In 2021, Taiwan's economy grew at an annual rate of 6.45%, higher than the 3.36% of the previous
year. Domestic demand served as the leading force for economic expansion and contributed 4.55
percentage points to real GDP growth. This was in part due to a robust increase in fixed capital
formation as well as an expansion in government consumption. In terms of external demand,
both exports and imports achieved double-digit growth, and thus net exports grew moderately
and contributed 1.90 percentage points to real GDP growth. In the meantime, nominal GNI (gross
national income, in US dollars) rose by 14.67% and per capita GNI increased from US$29,202 to
US$33,638 over the year 2021.

In the first quarter, real GDP recorded the highest level of growth over the year at 9.20%. Private
consumption regained its growth momentum, and government consumption grew at a steady
pace. A tremendous increase in private investment was driven by expansions in machinery and
equipment investment and construction investment. Meanwhile, exports grew robustly owing to
emerging technology applications (e.g., 5G telecommunication, high performance computing,
and automotive electronics) and business opportunities arising from the stay-at-home economy.
In the second quarter, real GDP growth declined slightly to 7.76%. Growth momentum in private
consumption retreated as the government raised the COVID-19 alert level to curb the pandemic.
Yet, growth in government consumption, private investment, and exports remained strong amid a
spike in infections in mid-May.

In the third quarter, growth in real GDP declined further to 4.37% while the impact of COVID-19
on private consumption worsened. In response to the pandemic, the government revised up
the budget for epidemic prevention, relief, etc. and thereby boosted government consumption.

Real Growth Rate of GDP Per Capita GNI

% US$
7 35,000

6
30,000
5

25,000
4

3
20,000

2
15,000
1

0 10,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Statistical Abstract of National Income, DGBAS, Executive Yuan, Source: Statistical Abstract of National Income, DGBAS, Executive Yuan,
February 2022. February 2022.

9
 I. Developments in the Real Economy

Benefiting from higher semiconductor capital expenditures and the construction of 5G networks and
offshore wind power plants, growth in private investment strengthened further. In the meantime, the
global economic recovery and business opportunities arising from emerging technology applications
and digital transformation-related products provided favorable conditions for export growth. In the
fourth quarter, real GDP growth improved slightly and reached 4.86%. Of note, private consumption
resumed positive growth as the pandemic eased off; the growth was partly fueled by the fiscal
stimulus program. The combination of production capacity enhancement, green energy investment,
and transportation procurement resulted in another quarter of strong growth for private investment.
Meanwhile, the holiday shopping season effect in Western countries, together with emerging
technology applications and demand for digital transformation, bolstered export growth in the
fourth quarter.

Expenditure Components of GDP

All expenditure components of GDP, except private consumption, recorded positive growth
in 2021. Among all the components, exports of goods and services was the primary source of
economic growth and contributed 9.89 percentage points to real GDP growth for the year. Gross
fixed capital formation and government consumption contributed to real GDP growth by 3.55 and
0.53 percentage points, respectively. Private consumption, on the other hand, was a drag of 0.18
percentage points on real GDP growth. With respect to shares of GDP, exports of goods and services
remained to account for the largest share of GDP at 66.32%, followed by private consumption at
44.69% and gross fixed capital formation at 26.03%.

GDP by Expenditure
Unit: %
2021 2020

Real Contribution to Real Contribution to

Real Growth Real Growth
Share Growth Share Growth
Rate of Rate of
Rate GDP* Rate GDP*

Private Consumption 44.69 -0.38 -0.18 48.49 -2.53 -1.32

Government Consumption 13.52 3.81 0.53 14.00 2.60 0.37
Gross Fixed Capital Formation 26.03 14.68 3.55 24.16 5.91 1.41
Change in Inventory 0.82 - 0.65 0.03 - 0.23
Exports of Goods and Services 66.32 17.04 9.89 58.04 1.22 0.77
(Less: Imports of Goods and Services) 51.38 17.86 7.99 44.72 -3.59 -1.91
Expenditure on GDP 100.00 6.45 6.45 100.00 3.36 3.36
Note: * Percentage point.
Source: Statistical Abstract of National Income, DGBAS, Executive Yuan, February 2022.

(1) Sluggish Growth in Private Consumption

Caused by a surge in COVID-19 cases, private consumption fell sharply in the second and

10
CBC Annual Report 2021

the third quarters and then recovered in the last quarter of 2021. For the year as a whole, private
consumption grew at an annual rate of -0.38%, considerably better than the -2.53% of 2020, and
contributed -0.18 percentage points to real GDP growth.

Because of travel restrictions, consumers were induced to reallocate spending away from
outbound tourism to domestic consumption, and therefore private consumption grew by 2.66% in
the first quarter. However, the domestic pandemic situation took a sharp turn for the worse in May
and forced the government to tighten COVID-19 restrictions. As a consequence, consumers cut
back spending on domestically-oriented service activity; private consumption then dropped by
0.46% in the second quarter. The pandemic-
induced disruptions continued into the second Real Growth Rate
half of the year, and catering, retail, and of Private Consumption Expenditure
%
transportation industries were particularly hard 6

hit. Private consumption declined further by

4
5.25% in the third quarter. As the pandemic
2
eased off over time, the government gradually
loosened epidemic control restrictions and 0

attempted to revitalize the economy with

-2
various fiscal stimulus measures. Private
-4
consumption therefore increased by 1.57% in 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

the fourth quarter. Source: Statistical Abstract of National Income, DGBAS, Executive Yuan,
February 2022.

(2) Healthy Expansion in Fixed Capital Formation

Fixed capital formation grew robustly at an annual rate of 14.68% and contributed 3.55
percentage points to real GDP growth. The growth was attributed to higher demand for 5G
infrastructure investment, continuing investment
in green energy-related projects, and the 5HDO*URZWK5DWH
expansion of production capacity in Taiwan by
RI)L[HG&DSLWDO)RUPDWLRQ

leading technology firms. 

Driven by higher capital expenditures in the 

technology industry and continuing investments 

in 5G-infrastructure and green energy-related


projects, both machinery and equipment
investment and construction investment 

expanded at a healthy pace in the first half 

         
of the year. Gross fixed capital for mation
6RXUFH6WDWLVWLFDO$EVWUDFWRI1DWLRQDO,QFRPH'*%$6([HFXWLYH<XDQ
increased by 12.13% and 13.33% in the first )HEUXDU\

11
 I. Developments in the Real Economy

two quarters, respectively. Stable growth in transportation investment, machinery and equipment
investment and construction investment continued to push fixed capital formation to a higher level
in the second half of the year. The growth rates of fixed capital formation were 21.40% and 11.72% in
the last two quarters of the year, respectively.

In terms of the type of fixed capital formation, a boom in the technology industry resulted in a
high growth rate of 29.26% for machinery and equipment investment, while construction investment
grew steadily at an annual rate of 8.33% in 2021. Transportation investment, on the other hand, also
achieved a double-digit growth rate of 14.64% owing to the procurement of rail vehicles, vessels,
and aircrafts by local carriers. Lastly, investment in intellectual property remained relatively stable
and increased by 3.07% for the entire year.

(3) Significant Growth in Real Exports

In light of the global economic recovery and business opportunities arising from emerging
technology applications, exports of goods and services grew notably by 17.04% for the entire year,
supported by exports of traditional manufacturing goods and electronic goods. On balance, exports
of goods and services contributed 9.89 percentage points to real GDP growth in 2021.

In the first half of the year, emerging technology applications began to prevail, and COVID-19
accelerated the development of digital transformation; at the same time, demand for traditional
manufacturing goods gradually recovered. Driven by those positive factors, exports grew by
21.74% and 22.51% in the first two quarters,
respectively. In the second half of the year,
5HDO*URZWK5DWHVRI([SRUWVDQG,PSRUWV
widespread vaccinations around the world  ([SRUWV ,PSRUWV

slowly brought global trade activity back
to nor mal, thereby stimulating demand for 

traditional manufacturing goods. As a result, 

exports increased by 13.95% in the third quarter.


Although the growth momentum remained
strong because of technology megatrends and 

the holiday shopping season effect in Western 

         
countries, a higher base effect resulted in a
6RXUFH6WDWLVWLFDO$EVWUDFWRI1DWLRQDO,QFRPH'*%$6([HFXWLYH<XDQ
slightly lower growth rate of 11.68% in the fourth )HEUXDU\

quarter.

Turning to the imports of goods and services, the combination of stronger demand for capital
equipment and an increase in export-derived demand caused imports to rise remarkably by 17.86%
for the entire year.

12
CBC Annual Report 2021

Rises in National Saving Rate and Domestic Investment Rate

The national saving rate (the ratio of

national saving to GNI measured at current National Saving Rate
prices) increased moderately from 38.39% in and Domestic Investment Rate
% National Saving Rate Domestic Investment Rate
2020 to 42.22% in 2021, reflecting the adverse 45

impact of the pandemic on consumption. 40

Meanwhile, benefiting from spectacular growth 35

in prviate investment, the domestic investment

30

rate (the ratio of domestic investment to GDP

25
measured at current prices) reached 26.85%
20
in 2021, slightly higher than the 24.19% of the
15
previous year. Overall, the difference between 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

gross national saving and gross domestic Source: Statistical Abstract of National Income, DGBAS, Executive Yuan,
February 2022.
investment as a share of GDP rose from 15.31%
in 2020 to 16.19% in 2021.

13
 I. Developments in the Real Economy

3. Balance of Payments

In 2021, Taiwan's current account registered a record surplus of US$116,123 million, which
accounted for 15.0% of nominal GDP, up from 14.2% in the previous year. The financial account
posted a net asset increase of US$104,604 million. The reserves and related items recorded a surplus
of US$20,993 million, which was reflected in the increase in foreign reserve assets held by the Bank.

Balance of Payments
Unit: US$million
(1) (2)
(1)-(2)
2021 2020
A. Current account 116,123 94,956 21,167
Goods: credit (exports) 459,068 342,489 116,579
Goods: debit (imports) 368,948 267,461 101,487
Balance on goods 90,120 75,028 15,092
Services: credit (exports) 52,012 41,211 10,801
Services: debit (imports) 39,698 37,457 2,241
Balance on services 12,314 3,754 8,560
Primary income: credit 38,364 38,446 -82
Primary income: debit 21,974 19,118 2,856
Balance on primary income 16,390 19,328 -2,938
Secondary income: credit 8,707 7,945 762
Secondary income: debit 11,408 11,099 309
Balance on secondary income -2,701 -3,154 453
B. Capital account 3 -9 12
C. Financial account 104,604 46,251 58,353
Direct investment: assets 10,108 11,500 -1,392
Equity and investment fund shares 10,007 10,942 -935
Debt instruments 101 558 -457
Direct investment: liabilities 5,405 6,053 -648
Equity and investment fund shares 2,614 5,528 -2,914
Debt instruments 2,791 525 2,266
Portfolio investment: assets 81,194 36,153 45,041
Equity and investment fund shares 19,721 2,003 17,718
Debt securities 61,473 34,150 27,323
Portfolio investment: liabilities -20,087 -22,881 2,794
Equity and investment fund shares -21,189 -23,212 2,023
Debt securities 1,102 331 771
Financial derivatives: assets -21,822 -20,563 -1,259
Financial derivatives: liabilities -21,536 -20,997 -539
Other investment: assets 18,780 -808 19,588
Other investment: liabilities 19,874 17,856 2,018
D. Net errors and omissions 9,471 -354 9,825
E. Reserves and related items* 20,993 48,342 -27,349
Note: * Excluding valuation changes in exchange rates.
Source: Balance of Payments, CBC, February 2022.

14
CBC Annual Report 2021

Wider Current Account Surplus Current Account

Goods Services Primary Income
The current account consists of four major US$billion Secondary Income Current Account Balance
120
items, namely goods, services, primary income, 110
( + ) Surplus
100
90
and secondary income. 80
70
60
(1) Goods 50
40
30
Bolstered by strong demand for emerging 20
10
0
technology applications like high performance -10
-20
computing, Taiwan's external merchandise -30
(-) Deficit
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
trade continued with substantial growth in
Source: Balance of Payments, CBC, February 2022.
2021, with the value of exports, on a BOP
basis, increasing by 34.0% to US$459,068 million
from 2020. Among its components, net exports of goods under merchanting increased by 61.8%
to US$20,867 million. The value of imports increased by 37.9% to US$368,948 million. Overall, as the
increase in exports exceeded that in imports, the trade surplus widened from US$75,028 million to
US$90,120 million for the year. The top five trading partners of Taiwan in 2021 were Mainland China
including Hong Kong (hereafter in this chapter referred to as Mainland China), ASEAN, 1 the US,
Europe, and Japan.

In ter ms of Taiwan's trade with Mainland China, the value of exports amounted to
US$188,905 million in 2021, 24.8% higher than the previous year. As a manufacturing center of
the world, Mainland China remained Taiwan's largest trading partner, though its share of total
exports dropped to 42.3%. Among major export products, electronic parts and components
maintained the leading role, which benefited from increasing use of emerging technologies.
Imports from Mainland China grew by 29.9% to US$84,171 million in 2021, though its share of total
imports shrank to 22.1%. The increase mainly came from electronic parts and components and
information, communication and audio-video products as a result of stronger export-derived
demand. As the increase in exports exceeded that in imports, the trade surplus with Mainland
China increased to US$104,734 million in 2021, still the largest source of Taiwan's trade surplus.

Exports to the ASEAN economies increased to US$70,246 million in 2021, up by 32.0% with a
strong export performance of electronic parts and components and mineral products. Imports from
the ASEAN economies increased by 31.4% to US$47,169 million, accounting for 12.4% of total imports,
as imports of iron and steel and articles thereof and mineral products rose. Overall, the trade surplus
with the ASEAN economies rose to US$23,076 million. Singapore, Vietnam, and the Philippines were
the third, fourth, and fifth largest sources of Taiwan's trade surplus, respectively.

1 Association of Southeast Asian Nations, including Brunei Darussalam, Cambodia, Indonesia, Laos, Myanmar, Malaysia, the Philippines, Singapore, Thailand, and
Vietnam.

15
 I. Developments in the Real Economy

In 2021, Taiwan's exports to the US grew 30.0% to US$65,696 million, comprising a slightly higher
share of 14.7% in total exports compared to the year before. The increase mainly came from
information, communication and audio-video products. As for imports from the US, the amount
increased by 20.2% to US$39,075 million, with its share in total imports decreasing to 10.3%. The major
products contributing to the expansion were mineral products and machinery. The trade surplus with
the US expanded to US$26,621 million for the year, ranking second among Taiwan's surplus sources.

Exports to Europe increased by 36.8% to US$38,491 million, with its share of total exports
increasing to 8.6%. The major products contributing to this expansion were iron and steel and articles
thereof, and information, communication and audio-video products. Imports from Europe increased
by 28.4% to US$47,230 million and the share of total imports decreased to 12.4%, with machinery and
mineral products being the main sources of this increase. In all, Taiwan's trade deficit with Europe
expanded to US$8,739 million in 2021.

Exports to Japan increased by 6.5% to US$29,212 million and its share in Taiwan's total exports
slightly decreased to 6.5%. Imports from Japan increased by 22.3% to US$56,146 million as its share
of total imports decreased to 14.7%. Both exports to and imports from Japan owed their year-
on-year increases to electronic parts and components. The trade deficit with Japan widened
to US$26,934 million. Japan remained Taiwan's second largest source of imports and the largest
source of trade deficit in 2021.

Trade in Goods by Country

Unit: %
2021 2020
Amount Annual Amount Annual
Share Share
(US$million) Change (US$million) Change
Exports
Mainland China (including Hong Kong) 188,905 42.3 24.8 151,381 43.9 14.6
ASEAN 70,246 15.7 32.0 53,215 15.4 -1.3
US 65,696 14.7 30.0 50,550 14.6 9.3
Europe 38,491 8.6 36.8 28,143 8.2 -5.5
Japan 29,212 6.5 24.8 23,398 6.8 0.5
Rest of the World 53,893 12.1 40.2 38,438 11.1 -12.3
Total 446,443 100.0 29.4 345,126 100.0 4.9
Imports
Mainland China (including Hong Kong) 84,171 22.1 29.9 64,808 22.6 10.9
Japan 56,146 14.7 22.3 45,901 16.0 4.2
US 39,075 10.3 20.2 32,514 11.4 -6.7
Europe 47,230 12.4 28.4 36,797 12.9 0.7
ASEAN 47,169 12.4 31.4 35,901 12.5 2.7
Rest of the World 107,230 28.1 52.7 70,227 24.5 -8.6
Total 381,022 100.0 33.2 286,148 100.0 0.2
Source : Monthly Statistics of Exports and Imports, Ministry of Finance, R.O.C. (Taiwan).

16
CBC Annual Report 2021

(2) Services

In 2021, services registered a record surplus of US$12,314 million, up from US$3,754 million in the
previous year, mainly because of an increase in freight transport receipts.

Of the various components of the services account, receipts of manufacturing services on

physical inputs owned by others 2 increased by US$509 million to US$4,313 million in 2021. On the
debit side, payments for manufacturing services increased by US$512 million to US$2,044 million. In
total, net manufacturing receipts decreased from US$2,272 million to US$2,269 million.

In terms of maintenance and repair services n.i.e. (not included elsewhere), which covers
maintenance and repair work for or by nonresidents on ships, aircraft, and other transport
equipment, the receipts declined by US$379 million to US$901 million owing to decreased receipts
from aircraft repairs. On the other hand, the payments increased by US$145 million to US$894 million.
In all, the surplus on this account narrowed from US$531 million to US$7 million.

Transport receipts hit a record high, which increased by US$8,716 million to US$19,739 million,
reflecting increases in international freight proceeds as active global trade and supply chain
bottlenecks led to an increase in freight rates. Transport payments decreased by US$99 million to
US$9,582 million as a result of declines in passenger fares paid to foreign airlines. Overall, the surplus
of transport services in 2021 increased substantially from US$1,342 million to US$10,157 million.

Travel receipts decreased by US$1,015 million to US$785 million. Meanwhile, travel payments
decreased by US$1,799 million to US$1,247 million. As many countries kept border controls in place
during the pandemic, numbers of inbound visitors and outbound travelers remained low. In all, the
deficit on the travel account narrowed to US$462 million.

In terms of other services, the receipts grew by US$2,970 million to US$26,274 million, while the
payments grew by US$3,482 million to US$25,931 million, both mainly attributable to the increase in
professional and management consulting services (which is under other business services). Overall,
the surplus of other services narrowed to US$343 million in 2021.

(3) Primary Income

Primary income consists of compensation of employees, investment income, and other primary
income. In 2021, primary income receipts decreased by US$82 million to US$38,364 million, mainly
because of a reduction in banks' interest receipts. Meanwhile, primary income payments increased
to US$21,974 million, US$2,856 million more than the previous year. This was mostly attributable to
an increase in portfolio investment income paid to nonresidents. Consequently, the surplus on the

2 Manufacturing services on physical inputs owned by others includes the processing, assembly, labeling, and packing undertaken by a service provider that
does not own the goods; namely a resident's payments to a nonresident for providing these services for the resident who is also the owner of the goods
concerned.

17
 I. Developments in the Real Economy

primary income account declined to US$16,390 million for the year of 2021.

(4) Secondary Income

For the year of 2021, secondary income receipts amounted to US$8,707 million, reflecting
increases in gifts and samples. Secondary income payments amounted to US$11,408 million, mainly
owing to increases in outward family support allowances. As a whole, the deficit on the secondary
income account narrowed to US$2,701 million in 2021.

Capital Account Deficit

The capital account includes capital transfers and the acquisition and disposal of non-
produced, non-financial assets. In 2021, the balance of the capital account grew from a deficit to
a surplus of US$3 million.

Net Asset Increase in Financial Account Financial Account

Direct Investment Portfolio Investment
In 2021, the financial account showed an Financial Derivatives Other Investment
US$billion Financial Account Balance
increase of US$104,604 million in net assets. 120
110
( + ) Increase in Net Assets
100
In terms of sub-categories, direct investment 90
80
70
and portfolio investment exhibited increases 60
50
of US$4,703 million and US$101,281 million in 40
30
20
net assets, respectively. Financial derivatives 10
0
and other investment exhibited a decrease -10
-20
-30
of US$286 million and US$1,094 million in net -40 ( - ) Decrease in Net Assets
-50
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
assets, respectively.
Source: Balance of Payments, CBC, February 2022.

(1) Direct Investment

Direct investment abroad by residents exhibited an increase of US$10,108 million in assets.

Direct investment in Taiwan by nonresidents showed an increase of US$5,405 million.

(2) Portfolio Investment

In 2021, portfolio investment abroad by residents increased by US$81,194 million mainly

because insurance companies and banks expanded their investment abroad. Equity
and investment fund shares increased by US$19,721 million while debt securities rose by
US$61,473 million.

On the other hand, local portfolio investment by nonresidents decreased by US$20,087 million
as foreign investors reduced holdings of Taiwanese stocks. Equity and investment fund shares
decreased by US$21,189 million. Debt securities increased by US$1,102 million.

18
CBC Annual Report 2021

(3) Financial Derivatives

Assets in financial derivatives decreased by US$21,822 million, principally because of gains on

transactions of financial derivatives received by other financial corporations.

Liabilities in financial derivatives decreased by US$21,536 million, mainly because of losses on

transactions of financial derivatives paid by other financial corporations.

(4) Other Investment

In 2021, other investment abroad by residents increased by US$18,780 million. Of the

components, currency and deposits rose by US$8,953 million mainly because of an increase
in foreign deposits of corporations; loans grew by US$4,685 million because of an increase in
interbank loans; other accounts receivable increased by US$2,625 million as a result of an increase
in corporations' accounts receivable from nonresidents; trade credit increased by US$2,502 million,
owing to an upturn in trade credit extended by corporations.

Other inward investment by nonresidents increased by US$19,874 million. Of the components,

currency and deposits rose by US$21,996 million because of growing deposits from nonresidents
and overseas branches; loans increased by US$7,871 million because of expanded external
borrowing by corporations; trade credit dropped by US$1,239 million, owing to a decrease in trade
credit received by corporations; other accounts payable declined by US$8,754 million, as a result
of a decrease in banks' accounts payable to nonresidents.

Increase in Foreign Exchange Reserves

The foreign exchange reserve assets held by the Bank increased by US$20,993 million in 2021,
mainly owing to returns from foreign exchange reserves management.

19
 I. Developments in the Real Economy

4. Prices

In 2021, Taiwan's WPI rose by 9.44%, mainly Inflation Rates

attributable to imbalances between demand % CPI Core CPI WPI
10
and supply owing to a strong increase in
global demand amid persistent supply chain 5

bottlenecks and a rebound in international

0
crude oil and other raw material prices
from pandemic-induced price declines in
-5
2020. Headline inflation, measured by the
CPI, increased by 1.96% compared to the -10
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
previous year's 0.23% decrease, mainly driven
Source: Price Statistics Monthly, DGBAS, Executive Yuan.
by supply side shocks such as rising prices of
fuels and lubricants, transportation, and fruit
and vegetables, as well as a lower base effect. The core CPI, which excludes fruit, vegetables, and
energy, averaged 1.33%, representing a mild price uptrend.

Marked Increase in Wholesale Prices

The WPI went up by 9.44% in 2021, the highest level since 1981. The marked increase reflected
rising global demand owing to a reopening of major economies led by progress on vaccinations
against COVID-19, and lingering supply chain bottlenecks pushing up international goods prices,
coupled with a lower base effect. In terms of monthly movements, the annual WPI inflation rate
trended upwards from the beginning of the year and reached an all-year high of 15.21% in October
because of higher import prices. Later, the increase in the annual WPI inflation rate abated and
narrowed to 12.46% in December.

Broken down by the three major components of the WPI, the annual rates of change in prices
for imports, domestic sales excluding imports, and exports ran up markedly in 2021 on account of
soaring prices of international raw materials.

Import prices, weighted at 34.10% of the WPI, rose by 16.63% in US dollar terms in 2021. As the
NT dollar appreciated against the US dollar over 2021, the annual growth rate of import prices eased
to a 10.53% increase in NT dollar terms, which mitigated imported inflationary pressures at home.
Among the components of import prices in terms of the NT dollar, prices of raw materials went up by
16.20% and accounted for 11.40 percentage points in the import price increase, mainly boosted by
rising prices of mineral products, base metal products and chemical products. Nonetheless, prices of
capital goods and consumer goods declined by 4.59% and 0.91%, respectively.

20
CBC Annual Report 2021

Export prices, weighted at 40.20% of the WPI, Annual WPI Rates

advanced by 12.40% in US dollar terms in 2021. WPI Domestic Sales Excluding Import Prices
% Export Prices (NT$) Import Prices (NT$)
20
Owing to the NT dollar appreciation against the
15
US dollar, the annual change in export prices
10
abated to a 6.54% increase in terms of the
5

NT dollar. Among the components of export 0

prices in NT dollar terms, prices of raw materials -5

-10
moved up by 7.88%, contributing 6.80 percentage
-15
points to the export price increase, primarily
-20
reflecting higher prices of mineral products, 1 4 7 10 1 4 7 10 1 4 7 10
2019 2020 2021

chemical products, as well as base metal Source: Price Statistics Monthly, DGBAS, Executive Yuan.

products. Prices of consumer goods rose by 1.87%,

while prices of capital goods dropped by 3.08%.

Driven by rising import costs of primary commodities, prices of domestic sales excluding imports,
weighted at 25.70% of the WPI, increased by 12.24% in 2021. In terms of the basic groups, prices of
manufacturing products rose by 14.36%, mainly attributable to surging prices of base metal products
and petroleum and coal products. Prices of agriculture, forestry, fishing, and animal husbandry
products, and prices of water, electricity, and gas supply went up by 8.32% and 0.43%, respectively.
In contrast, prices of quarrying and mining products registered a decrease of 2.59%.

Uptick in Consumer Prices

Compared with a slight decrease of 0.23% in the previous year, the CPI rose by 1.96% in 2021,
the highest increase since 2009. The CPI inflation rate trended up from the beginning of the year
and reached 2.62% in December, which marked the fifth consecutive month of an increase above
2%. The uptrend in CPI inflation was associated
with an increase in domestic fuel prices amid
international oil price upswings since the start Annual CPI Rates
of the year, a spike in fruit and vegetables % CPI Core CPI
3

prices caused by a lingering effect from the

2
disruptions of a typhoon and torrential rain
in August, and price hikes by some food and 1

beverage service providers during the fourth

0

quarter of the year.

-1

The core CPI inflation rate recorded mild

-2
year-on-year growth at an average pace of 1
2019
4 7 10 1
2020
4 7 10 1
2021
4 7 10

1.33% in 2021. With the pandemic situation Source: Price Statistics Monthly, DGBAS, Executive Yuan.

21
 I. Developments in the Real Economy

under control at home, domestic demand gradually rebounded, leading the core inflation rate to
trend up mildly and register 1.84% in December.

The main factors contributing to the rise of Brent Oil Prices

CPI inflation in 2021 were as follows: US$/Barrel 2021 2020
100
85.76
90 10/20
(1) For 2021, Brent oil prices averaged US$70.75
80 69.95 77.23
70.25 3/5 12/31
per barrel, increasing by 69.50% from the 70 1/6
60
previous year. As a result, higher import costs 51.22
50 12/31
of petroleum nudged up domestic fuel and 40
30
lubricant prices, which climbed by 22.06%
20
9.12
and accounted for 0.49 percentage points in 10 4/21
0
the CPI inflation rate. 1 2 3 4 5 6 7 8 9 10 11 12

Source: Refinitiv Datastream.

(2) As pandemic-related border controls and
travel restrictions implemented around the
world constrained flight seat capacity and thus sent airfares soaring, transportation fees went up by
11.86%, contributing 0.33 percentage points to CPI inflation.

(3) Owing to crop damage caused by torrential rain and a typhoon in June and August, prices of
vegetables and of fruit moved up by 14.01% and 4.56%, and accounted for 0.19 and 0.09 percentage
points in the CPI inflation rate, respectively.

(4) Prices of residential rent continued a mild uptrend and grew by 0.83%, contributing 0.12 percentage
points to CPI inflation.

(5) With imported beef prices surging because of global supply chain bottlenecks and prices of pork
rallying on tighter domestic pig supplies as rising feed costs hit pig farmers' margins, prices of meat
rose by 4.05%, contributing 0.09 percentage points to CPI inflation.

(6) Less discounted clothing drove up prices of garments by 2.54%, accounting for 0.09 percentage
points in the CPI inflation rate.

(7) Price hikes by food and beverage service providers to reflect higher raw food costs pushed up prices
of food away from home by 0.87%, contributing 0.09 percentage points to CPI inflation.

(8) An increase in tour group fees on account of growing demand for travel amid the eased pandemic
situation at home, as well as a lower base effect, caused prices of entertainment services to grow by
1.66%, accounting for 0.09 percentage points in the CPI inflation rate.

(9) Reflecting an upswing in prices of raw material imports, prices of household appliances went up by
1.42%, contributing 0.06 percentage points to CPI inflation.

22
CBC Annual Report 2021

The main factor contributing to downward pressure on the CPI in 2021 was the decline in prices
of communication equipment. Dragged down by discount promotions for mobile phones, prices of
communication equipment dropped by 8.25% year on year, subtracting 0.04 percentage points from
CPI inflation.

Percentage Changes in the Major Components of the CPI in 2021

Annual Rate Contribution to CPI

Item of Change Inflation Rate
(%) (Percentage Point)
CPI 1.96 1.96
Fuels & Lubricants 22.06 0.49
Transportation Fees 11.86 0.33
Vegetables 14.01 0.19
Residential Rent 0.83 0.12
Fruit 4.56 0.09
Meats 4.05 0.09
Garments 2.54 0.09
Food Away from Home 0.87 0.09
Entertainment Services 1.66 0.09
Household Appliances 1.42 0.06
Total 1.64
Communication Equipment -8.25 -0.04
Total -0.04
Others 0.36
Source: Price Statistics Monthly, DGBAS, Executive Yuan.

23
 I. Developments in the Real Economy

5. Labor Market

Decrease in Employment

As the domestic COVID-19 case spike in mid-May 2021 led to a tightening of containment
measures that battered the labor market, employment decreased from 11.53 million persons in the
beginning of the year to 11.30 million persons in June. Afterwards, employment gradually picked up
month by month along with the easing of restrictions as the domestic outbreak came under control. For
the year as a whole, annual average employment was 11.45 million persons, a decrease of 57 thousand
persons or 0.49% from the previous year, marking the first year-on-year decline since 2010.

In terms of employment by sector, the services sector was the most severely affected by the
tightened containment measures in response to the domestic COVID-19 flare-up, with employment
decreasing by 32 thousand persons or 0.47%. Within this sector, sharper declines were recorded in
wholesale and retail trade, down by 21 thousand persons, and in accommodation and food service
activities, down by 15 thousand persons.
Employment in the industrial sector decreased
(PSOR\PHQWDQG
by 17 thousand persons or 0.43%. Within this
8QHPSOR\PHQW5DWH
sector, employment in manufacturing registered 3HUVRQV (PSOR\PHQW OHIW 8QHPSOR\PHQW5DWH ULJKW 
 
the largest job losses with 21 thousand persons
less. Employment in the agricultural sector
 
also went down by six thousand persons or
1.13%. Of total employment, the services sector  

accounted for the lion's share at 59.81%, up

 
by 0.01 percentage points from the previous
year. The share of the industrial sector also
 
         
ticked up by 0.02 percentage points to 35.45%,
6RXUFH'*%$6([HFXWLYH<XDQ
while that of the agricultural sector shrank 0.03
percentage points to 4.73%.

In terms of employed persons by occupation, employment of white-collar workers,3 accounting

for 45.35% of total employment, decreased by eight thousand persons or 0.15%. Services and sales
employment made up 19.91% of total employment and decreased by eight thousand persons or
0.35%. The employment of blue-collar workers,4 accounting for 34.74% of total employment, suffered
the largest decline of 42 thousand persons or 1.05% owing to the pandemic.

3 Including legislators, senior officials, managers, professionals, technicians, associate professionals, and clerical support workers.
4 Including skilled workers in agricultural, forestry, fishing, and animal husbandry industries, and craft and machinery-related workers.

24
CBC Annual Report 2021

Rising Unemployment Rate &DXVHVRI8QHPSOR\PHQW

  
Affected by a surge in coronavirus 


caseloads in May 2021, the unemployment

rate rose sharply from 3.66% in the beginning

of the year to 4.80% in June, the highest since

November 1999, and then gradually moved

do w n t o 3.64% in Dec e m b er a s d om e st ic

economic activity recovered amid an

)LUVWWLPH %XVLQHVV 1RW6DWLVILHG 6HDVRQDORU
improving pandemic situation. For the year as a -RE6HHNHUV 6KULQNDJHRU ZLWK 7HPSRUDU\:RUN
&ORVHGRZQ 2ULJLQDO-REV &RPSOHWHG
whole, the unemployment rate was 3.95%, the
6RXUFH'*%$6([HFXWLYH<XDQ

highest since 2015.

With the government's support measures5 to mitigate the pandemic's impacts on the labor market,
unemployment duration decreased by 2.39 weeks over the previous year to 20.24 weeks. In terms of
age groups, unemployment duration of the age group 45-64 improved the most and decreased by
4.51 weeks to 19.30 weeks, followed by the 16.99 weeks for the age group 15-24 with a decrease of 1.69
weeks. The unemployment duration of the age group 25-34 decreased by 1.67 weeks to 22.32 weeks.
Meanwhile, the average number of the long-term unemployed6 was 50 thousand persons, a decrease
of five thousand persons compared to that in the previous year.

In terms of causes of unemployment, total unemployment in 2021 was 471 thousand persons,
increasing by 11 thousand or 2.39% from the previous year, mainly because unemployment of
experienced job seekers, with a 79.88% share of total unemployment, increased by 18 thousand
persons or 5.03%. Among them, unemployment because of shrinkage or closedown of business
recorded the greatest increase by 34 thousand persons or 25.50%, and its share of total
unemployment also grew from 28.69% the previous year to 35.16%, reflecting a rise in this type
of involuntary unemployment as a result of the impacts of the pandemic. On the other hand,
unemployment because of dissatisfaction with their original jobs accounted for the second
largest share of total unemployment at 33.38%, dropping by 14 thousand persons or 8.08%.
Meanwhile, unemployment because of conclusion of seasonal or temporary work decreased by
four thousand persons or 9.21%, with a share of 7.26%.

In terms of age groups, the unemployment rates of the age groups 25-44 and 45-64 edged up
by 0.02 and 0.22 percentage points from the previous year to 3.96% and 2.52%, respectively. The

5 Including extending the immediate part-time job program for workers impacted by COVID-19, measures to encourage youth employment and subsidize
employers to hire young people, support measures for workers who are self-employed or without definite employers, "Relief Loans for Workers" program, and
"the Recharge and Restart Training Program" for furloughed employees, and launching support measures for full-time and part-time employees, etc.
6 Referring to those who have been unemployed for 53 weeks or more.

25
 I. Developments in the Real Economy

8QHPSOR\PHQW5DWHE\
8QHPSOR\PHQW5DWHE\$JH (GXFDWLRQ%DFNJURXQG
   

&ROOHJHV
WR 8QLYHUVLWLHV
<HDUV2OG *UDGXDWH
6FKRROV

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6FKRROV
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6RXUFH'*%$6([HFXWLYH<XDQ 6RXUFH'*%$6([HFXWLYH<XDQ

unemployment rate of the age group 15-24 also went up by 0.50 percentage points to 12.11%, the
highest among all the age groups.

In terms of educational background, the unemployment rates of people rose for all groups
in 2021. For people with a junior high school diploma or below, a senior high school or vocational
school diploma, and a college degree or above, the unemployment rates increased by 0.12, 0.21,
and 0.02 percentage points to 2.97%, 3.77%, and 4.32%, respectively.

Decline in Labor Force Participation Rate

Affected by structural demographic change driven by a declining fertility rate and an aging
population in Taiwan and hit by the coronavirus pandemic, the labor force (employed and
unemployed combined) shrank by 45 thousand persons, or 0.38%, to 11.91 million persons in 2021,
the first contraction since records began in 1978. In contrast, the non-labor force grew by seven
thousand persons, or 0.09%, to 8.27 million
persons. The average labor force participation
/DERU)RUFH3DUWLFLSDWLRQ5DWH
rate edged down by 0.12 percentage points  $OO 0DOH )HPDOH

over the previous year to 59.02% in 2021,
recording two consecutive years of decline. 

In terms of gender, the male labor force


participation rate was 66.93%, a drop of 0.31
percentage points from the year before. The 

female labor force participation rate has


continued to grow since 2001 and increased          

by 0.08 percentage points to 51.49% in 2021, 6RXUFH'*%$6([HFXWLYH<XDQ

26
CBC Annual Report 2021

reflecting that government policies have been effective in promoting gender equality, improving
the work environment, and facilitating female employment in recent years.

In terms of age groups, the labor participation rate of the age group 25-44 went down by
0.17 percentage points to 89.35%, while those of the age groups 16-24 and 45-64 increased
by 0.28 and 0.65 percentage points to 36.81% and 64.65%, respectively. Taiwan's labor force
participation rate, in its second year of decline owing to the pandemic, remained lower than
those of the United States (61.7%), Japan (62.1%), South Korea (62.8%), and Singapore (70.5%),
attributable to structural factors such as the extension of schooling and early retirement.

In terms of education background, the labor force participation rates of workers with a junior
high school diploma or below and those with a senior high school or vocational school diploma
dropped by 1.46 and 0.32 percentage points to 38.24% and 62.45%, respectively, while that of
workers with a college degree or above rose by 0.22 percentage points to 66.22%.

Modest Wage Growth

For the year 2021, the average monthly $PRXQWDQG5DWHRI&KDQJH

earnings per worker of the non-farm sector RI$YHUDJH(DUQLQJV
RI1RQIDUP:RUNHUV
grew by 2.94% to NT$55,754, the largest increase 17 $YHUDJH(DUQLQJV OHIW 5DWHRI&KDQJH ULJKW 
 
over the past three years. The increase was due
to higher pay raises in the manufacturing sector  

benefiting from a steady recovery of the global

 

economy, as well as increased overtime hours

 
in non-farm sectors, which combined to boost
regular earnings and irregular earnings such as  

overtime pay and bonuses. After adjustment  

         
for inflation, the average real monthly earnings
6RXUFH'*%$6([HFXWLYH<XDQ
increased by 0.96% to a historical high at
NT$53,445.

In terms of major sectors, thanks to rising external demand, the industrial sector gained faster
wage growth, while the services sector performed worse owing to the domestic COVID-19 flare-
up, leading to an uneven recovery between these two sectors. The average monthly earnings
of the industrial and services sectors increased by 5.82% and 0.95% to NT$56,227 and NT$55,413,
respectively, while increasing by 3.78% and decreasing by 1.00%, respectively, in real terms.

In terms of industrial classification, the finance and insurance sector had the highest average
monthly earnings with NT$98,897, the electricity and gas supply sector came in second with

27
 I. Developments in the Real Economy

NT$93,628. On the other hand, the education sector 7 and the accommodation and food service
activities earned average monthly wages of NT$31,386 and NT$35,057, respectively, the lowest two
among all sectors owing to impacts of the pandemic and a large number of part-time employees
in these sectors. In terms of growth rates, the manufacturing sector's average monthly earnings
witnessed the highest increase of 6.26%, followed by the real estate sector at 6.04%.

Labor Productivity Significantly Increased While Unit Labor Cost Decreased

As the increase in total production

outpaced the increase in total working hours, /DERU3URGXFWLYLW\DQG8QLW/DERU&RVW
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second place with an increase of 18.00%.

Since the increase in total earnings was lower than that in production, unit labor costs of the
industrial and the manufacturing sectors decreased by 5.73% and 6.26% year on year, respectively.
Of all the manufacturing sectors, the leather, fur and related products manufacturing sector
experienced the largest decrease in unit labor cost with 20.23%, followed by machinery equipment
manufacturing with a decrease of 16.17%.

7 Excluding schools at all levels within the formal education system (except preschools).

28
CBC Annual Report 2021

Financial Developments

29
 II. Financial Developments

II. Financial Developments

1. Overview

In 2021, the domestic economy continued to rebound in the first half of the year and corporate
demand for funds was strong, leading to faster growth in loans and investments of banks. As a result,
for the year as a whole, the annual growth rate of the monetary aggregate M2 rose.

The Bank's policy rates remained unchanged and deposit rates and the base lending rate
offered by banks stayed steady, while the weighted average interest rate on deposits and the
rate on loans slightly moved downward. Owing to ample market liquidity, the interbank overnight
call loan rate remained stable; bills market rates and the average 10-year government bond yield
declined over the previous year, albeit with a mid-year rebound.

In regard to the exchange rate, as the Fed maintained an easy monetary policy stance in the
first half of the year and Taiwan's exports showed robust growth, the NT dollar largely held strong
against the US dollar. At the end of 2021, the NT dollar appreciated against the US dollar compared
with a year earlier; on a daily average basis, the NT dollar also appreciated against the US dollar in
2021 compared with the previous year.

In the stock market, the Taiwan Stock Exchange Capitalization Weighted Stock Index, the TAIEX,
swung up to a historical high before the end of the year. The daily average transaction value also hit
a record high in 2021.

M2 and Bank Loans and Investments Grew Faster

The annual growth rate of bank loans and investments increased from 6.79% at the end of
2020 to 8.39% at the end of 2021. The increase was due to enterprises' stronger demand for funds
as economic growth continued to pick up throughout the year. With faster growth in bank loans
and investments boosting demand for money, the monetary aggregate M2 (measured on a daily
average basis) recorded an annual growth rate of 8.72% in 2021. This was higher than the 5.84%
registered in 2020 while also exceeded the Bank's 2.5% to 6.5% reference range for the year.

Both Deposit and Loan Rates Declined

The Bank's policy rates remained unchanged and, as a result, the posted interest rates on
deposits of banks stayed steady. At the end of 2021, the average fixed rate on one-year time
deposits of the five major domestic banks was 0.77%, the same as a year earlier, and their average
base lending rate was 2.442%, also the same as the year before. Meanwhile, the weighted average

30
CBC Annual Report 2021

rate on their newly-extended loans was 1.200% in 2021, declining by 0.073 percentage points over
the previous year.

For domestic banks as a whole, the weighted average interest rate on deposits was 0.36%,
declining by 0.09 percentage points over the previous year. The reasons for the decline included
some funds shifted from higher-rate time deposits to lower-rate demand deposits, lower interest
rates were applied to maturing time deposits at renewal, and some banks reduced their posted
deposit rates. Meanwhile, the weighted average interest rate on loans was 1.60%, declining by 0.08
percentage points owing to an increase in low-interest loans to local governments and interest rate
cuts on loans by some banks to boost lending business.

Bills Market Rates Went Up After Declining

As the Bank continued to conduct open market operations to maintain market liquidity at
an appropriate, easy level in 2021, the weighted average overnight call loan rate was steady
between 0.079% and 0.082% during the first eight months of the year. It slightly increased to 0.086% in
September owing to greater demand for funds during the Mid-Autumn Festival holidays as well as an
end-of-quarter effect, and stayed between 0.082% and 0.083% for the rest of the year. With regard
to the bills market, money market rates first declined and then went up during the year, while their
yearly average rates were all lower than those of the previous year amid ample market liquidity. The
average 1-30 day commercial paper rate in the secondary market was 0.22% in 2021, declining by
0.12 percentage points over the previous year.

10-Year Government Bond Yield Came Lower than Last Year, Albeit with a Broad Uptrend

In 2021, higher inflation led the yields on US government bonds to increase, while the yields
on Taiwanese government bonds did not rise as sharply thanks to ample market liquidity. The
turnover-weighted average of the yield on the benchmark 10-year government bond declined
by five basis points over the previous year as transaction in the secondary government bond
market showed a downtrend in the recent years. However, government bond yields broadly went
up during the year. In terms of issuance, as the Central Government Debt Service Fund renewed
maturing government bonds and increased issuance to meet budget needs, the total amount of
government bonds increased by NT$82.0 billion over the previous year.

NT Dollar Held Strong and Average Exchange Rate Appreciated

In 2021, the NT dollar exchange rate against the US dollar broadly appreciated. At the
beginning of the year, the NT dollar appreciated against the US dollar on the back of the Fed's
continuous easing and Taiwan's robust export growth. In March, the NT dollar weakened against
the US dollar following US President Biden's signing of the US$1.9 trillion relief package and market

31
 II. Financial Developments

optimism of a US economic recovery. In April, the NT dollar appreciated against the US dollar
because the Fed reiterated its easy monetary policy stance and continued to dismiss inflation risks
as transitory. In the second half of the year, persistently higher inflation led most Fed officials to
predict an earlier rate hike, and the Fed decided in late September to begin tapering by the end
of the year, bolstering the US dollar and thus weakening the NT dollar. From late October onwards,
the NT dollar appreciated against the US dollar owing to continuous net selling of the US dollar by
local exporters. At the end of 2021, the NT dollar appreciated by 2.95% year on year against the US
dollar. On a daily average basis, the NT dollar appreciated against the US dollar by 5.55% in 2021.

Stock Index and Turnover Hit Historical Highs

In 2021, the TAIEX generally swung upwards. During the months of May, July to August, and
September to October, the TAIEX declined significantly owing to domestic COVID-19 outbreaks,
deferred policy decision related to the day trading tax cut, the Evergrande default crisis and tighter
energy controls in China, and inflation and debt ceiling concerns in the US. For the other months,
however, it was supported by factors including domestic infections coming under control, US stock
indices renewing record highs, and Taiwan's listed companies reporting good earnings and exports
showing strength. Therefore, the TAIEX went on an uptrend from the yearly low at the beginning of
the year to an all-time high of 18,248 points on December 29. The TAIEX stood at 18,219 points at the
end of the year, increasing by 23.7% compared with a year earlier. The daily average transaction
value reached a record amount of NT$378.2 billion with a significant increase of 103.0% over the
previous year.

32
CBC Annual Report 2021

2. Banking Sector

Number of Monetary Financial Institutions

At the end of 2021, the number of monetary financial institutions (defined hereafter in this
chapter as excluding the central bank) increased to 404. The number of domestic banks increased
by one with the opening of LINE Bank. The number of foreign and Mainland Chinese banks increased
by one as PT Bank Rakyat Indonesia (Persero) Tbk. set up its branch in Taiwan. As for money market
mutual funds, the number remained zero after the last remaining fund was liquidated in May 2017.
The numbers of the other types of monetary financial institutions all stood unchanged.

In addition to monetary financial institutions, the number of financial holding companies was 16,
the same as 2020.

Number of Monetary Financial Institutions by Type

Types of Institutions End of 2021 End of 2020 Annual Change

Total Number of Main Offices 404 402 2
Domestic Banks 39 38 1
Foreign and Mainland Chinese Banks 30 29 1
Credit Cooperatives 23 23 0
Credit Departments of Farmers' and
311 311 0
Fishermen's Associations
Chunghwa Post 1 1 0
Total Number of Branches 6,098 6,090 8
Local Branches 5,887 5,885 2
Overseas Branches 152 146 6
Offshore Banking Units 59 59 0
Sources : 1. Financial Statistics Monthly (February 2022), CBC.
   2. Department of Financial Inspection, CBC.

Market Shares of Deposits and Loans

At the end of 2021, domestic banks maintained a dominant role in the deposit market,
with the market share rising further to 80.55%. Such a phenomenon was primarily due to a more
sizeable increase in the deposits of domestic banks, resulting from continued credit growth and
ample market liquidity, as well as inward remittances of firms' overseas sales revenues. By contrast,
the deposit market shares shrank for most of the other types of monetary institutions, with the
departments of savings and remittances of Chunghwa Post taking up a share of 12.56%, the credit
departments of farmers' and fishermen's associations 4.08%, credit cooperatives 1.52%, and branches
of foreign and Mainland Chinese banks 1.29%.

33
 II. Financial Developments

In terms of loans, the market share Market Shares of Deposits and Loans
by Category of Monetary Financial Institutions
of domestic banks rose to 90.53%,
End of 2021 End of 2020
owing to stronger funding needs Deposits* Loans**
Unit : % Unit : %
of enterprises fueled by the global
12.56 Chunghwa Post 0.02
economic recovery and Taiwan's robust 13.07 0.02

Credit Departments of
exports, along with sustained growth 4.08 Farmers’ & Fishermen’s 3.80
4.12 3.92
Associations
in the housing market. Further more,
1.52 Credit Cooperatives 1.66
1.52 1.70
public enterprises increased borrowing
1.29 Foreign and Mainland 3.99
from domestic banks to facilitate their 1.92 Chinese Banks 4.15

efforts in line with the national energy 80.55

Domestic Banks 90.53
79.37 90.21

transition plan. In contrast, foreign 100 80 60 40 20 0 0 20 40 60 80 100

and Mainland Chinese banks' market Notes: * Excluding the values of the host contracts of structured products issued
by banks.
share declined to 3.99%. For the other ** Including data for securities acquired under reverse repurchase
agreements.
institution types, Chunghwa Post's Source: Financial Statistics Monthly (February 2022), CBC.

market share remained at 0.02%. For

credit departments of farmers' and fishermen's associations and credit cooperatives, which tend to
have higher lending rates, their market shares continued to drop to 3.80% and 1.66%, respectively.

Main Sources and Uses of Funds in Monetary Financial Institutions

At the end of 2021, the total amount of funds in monetary financial institutions was
NT$60,130 billion, increasing by NT$3,748 billion compared to the end of 2020. The combined
share of transaction and nontransaction deposits was around 85%. Against a backdrop of
abundant market liquidity, the balances of transaction deposits and nontransaction deposits
kept growing, posting annual growth rates of 11.92% and 4.30%, respectively.

In the case of fund uses, bank loans still accounted for over 50% of total uses of funds at the
end of 2021.Owing to strong export growth bolstered by a global economic upturn as well as
an increasing funding need among public and private enterprises, the year-end loan balance
of monetary financial institutions expanded by 7.99%, or NT$ 2,479 billion, over the previous year
end, picking up to a rate faster than the 7.18% of 2020. As for net foreign assets, owing to active
deposit absorption by their overseas branches, the foreign liabilities of monetary financial institutions
increased, causing the annual growth rate of net foreign assets to fall sharply from 23.87% at the end
of the previous year to 0.96%.

Portfolio investments by monetary financial institutions measured on a cost basis showed an

annual growth rate of 10.66% in 2021. As for banks' purchases of certificates of deposit issued by the
central bank, its annual growth rate decreased significantly from 16.60% at the end of the previous
year to 3.59%, but its share of funds used remained stable at about 16%.

34
CBC Annual Report 2021

Main Sources and Uses of Funds in Monetary Financial Institutions1

Unit: NT$billion
End of 2021 End of 2020 Annual Change
Annual Annual
Amount Share (%) Growth Rate Amount Share (%) Growth Rate Amount Share (%)
(%) (%)
Sources:
Transaction Deposits 2 22,318 37.12 11.92 19,940 35.37 17.67 2,378 1.75
Nontransaction Deposits 3 28,902 48.07 4.30 27,710 49.14 5.17 1,192 -1.07
NT Dollar Deposits 21,495 35.75 2.29 21,015 37.27 1.05 480 -1.52
Foreign Currency Deposits 4 7,407 12.32 10.63 6,695 11.87 20.63 712 0.45
Government Deposits 1,285 2.14 13.22 1,135 2.01 6.18 150 0.13
Other Items 7,625 12.67 0.36 7,597 13.48 10.19 28 -0.81
Total 60,130 100.00 6.65 56,382 100.00 10.00 3,748 0.00
Uses:
Net Foreign Assets 4 5,174 8.60 0.96 5,125 9.09 23.87 49 -0.49
Loans 33,492 55.70 7.99 31,013 55.00 7.18 2,479 0.70
NT Dollar Loans 32,415 53.91 7.96 30,026 53.25 6.99 2,389 0.66
Foreign Currency Loans 4 1,077 1.79 9.10 987 1.75 13.23 90 0.04
Portfolio Investments 5 7,508 12.49 10.66 6,784 12.03 5.81 723 0.46
Purchases of CDs Issued by CBC 9,391 15.62 3.59 9,065 16.08 16.60 326 -0.46
Deposits with CBC 4,565 7.59 3.87 4,395 7.80 9.92 170 -0.21
Notes: 1. Monetary Financial Institutions include Domestic Banks, Local Branches of Foreign and Mainland Chinese Banks, Credit Cooperatives, Credit
Departments of Farmers' and Fishermen's Associations, Chunghwa Post and Money Market Mutual Funds.
2. Including checking accounts, passbook deposits and passbook savings deposits.
3. Including time deposits, time savings deposits, foreign currency deposits, postal savings deposits, non-residents' NT dollar deposits, repurchase
agreements and money market mutual funds.
4. Excluding valuation changes in the exchange rate of the NT dollar against foreign currencies.
5. Measured at original costs.
Source: Financial Statistics Monthly (February 2022), CBC.

Deposits

Because of the continued growth in domestic credit, an abundance of market capital, and the
inward remittances of overseas sales revenues by some companies, as of year-end 2021, the deposit
balance of monetary financial institutions was NT$52.5 trillion, an increase of NT$3.5 trillion compared
with the previous year end. However, because of a year-on-year increase in net resident capital
outflow and a higher base effect, the annual growth rate of deposits decreased from 9.22% at year-
end 2020 to 7.19% at year-end 2021.

In terms of transaction deposits, its annual growth rate decreased from 17.67% at year-end 2020
to 11.92% at year-end 2021 because of a slowdown in the growth of passbook savings deposits.

The aforementioned slowdown was partly due to a higher comparison base in 2020 as many
people opted to keep money in more-liquid forms of accounts such as passbook savings deposits
in view of the pandemic's impact. Moreover, in 2021, there was a decrease in the balance of
securities giro accounts as Taiwan's stock market was dampened by a domestic COVID-19 flare-up,
the Evergrande default crisis and China's energy control tightening, and market fears of elevated

35
 II. Financial Developments

US inflation. These developments combined Annual Growth Rates of Deposits

to slow down the growth in passbook savings Total Deposits Transaction Deposits*
% Nontransaction Deposits** Government Deposits
25
deposits.

20
Although the annual growth rate
decreased, transaction deposits as a share of 15

total deposits increased to 42.51% at the end of

10
2021.
5

In terms of nontransaction deposits, its

0
annual growth rate decreased from 4.01% 1 4 7 10 1 4 7 10 1 4 7 10
2019 2020 2021
at year-end 2020 to 3.56% at year-end 2021 Notes: * Including checking accounts, passbook deposits and passbook
savings deposits.
because the growth of foreign currency ** Including time deposits, time savings deposits, foreign currency
deposits, postal savings deposits, nonresidents’ NT dollar
deposits, repurchase agreements, and money market mutual
deposits in 2021 was less than that in 2020. Its funds.
Source: Financial Statistics Monthly (February 2022), CBC.
share in total deposits also shrank from 56.97%
at year-end 2020 to 55.05% at year-end 2021.

The annual growth rate of foreign currency deposits showed a significant decrease in the first
half of the year owing to an increase in overseas investment by residents and pension funds, as
well as the paying off of foreign loans by some companies. By contrast, the annual growth rate
increased slightly in the second half of 2021 owing to an increase in inward remittances of overseas
sales revenues. At the end of 2021, the annual growth rate of foreign currency deposits decreased
from 14.23% the year before to 7.46%, whereas foreign currency deposits as a share of total deposits
grew from 14.07% a year ago to 14.11%.

In 2021, the annual growth rate of time deposits (including negotiable certificates of deposit)
increased and then decreased. In the beginning of the year, the amount of pension funds saved
as time deposits increased; during mid-2021, many companies delayed cash dividend payments as
shareholders' meetings were postponed amid the domestic COVID-19 flare-up and saved the money
temporarily as time deposits. As a result, the annual growth rate of time deposits reached a peak
of 11.47% in August. Later, as companies began to pay their cash dividends and a financial holding
company used the funds in its time deposits to purchase the shares of a life insurance company, the
annual growth rate of time deposits slightly decreased. At the end of 2021, time deposits grew faster
year-on-year from the previous year's 5.62% to 6.42%, whereas its share in total deposits shrank from
11.34% at year-end 2020 to 11.26% at year-end 2021.

The annual growth rate of time savings deposits continued to decrease in 2021 but at a slower
pace. The decrease slowed primarily because of an expansion in 2021 from pension funds moving a
part of their money into time savings deposits based on fund scheduling strategies, as well as a lower

36
CBC Annual Report 2021

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comparison base in 2020 when many savers chose to park their money in highly-liquid passbook
savings deposits amid the pandemic as a precaution. Consequently, the annual growth rate of time
savings deposits rose from -2.31% the previous year to -0.45%. Regarding postal savings, their annual
growth rate increased from 2.00% at year-end 2020 to 2.85% at year-end 2021. At the end of 2021,
time savings and postal savings as a share of total deposits decreased from the previous year's
18.03% to 16.74%, and from 12.83% to 12.31%, respectively.

With regard to government deposits, several factors contributed to a broad upswing. Because of
an increased public need for relief packages during a domestic pandemic flare-up, the total amount of
government bonds issued was higher than that of the previous year. Furthermore, revenue from profit-seeking
enterprise income tax and from securities transaction tax both increased significantly, as the provisional
tax payment exempted in 2020 as a pandemic relief measure was included by companies in their 2021
payment and transactions in the stock market surged on the back of robust earnings of listed companies.
As a result, the annual growth rate of government
deposits broadly trended upwards, reaching 13.22% Annual Growth Rates of Loans
and Investments
at the end of the year from the 6.18% one year
% Total Loans and Investments Loans Investments
before. Government deposits as a share of total 15

deposits also grew from 2.32% to 2.44%.

10
Bank Loans and Investments

The annual growth rate of loans and

5
investments of monetary financial institutions
was 8.39% at the end of 2021, up from 6.79%
0
at the end of 2020. Growth in loans increased 1 4 7 10 1 4 7 10 1 4 7 10
2019 2020 2021
to an annual pace of 7.89% at the end of Source: Financial Statistics Monthly (February 2022), CBC.

37
 II. Financial Developments

2021 from 7.00% at the end of the previous year, while growth in portfolio investment accelerated to
10.66% at the end of 2021 from 5.81% a year earlier.

Loans by Sector

The annual growth rate of private sector loans extended by banks (defined in the following
paragraphs as including domestic banks and local branches of foreign and Mainland Chinese
banks) climbed to 8.27% at the end of 2021 from 7.70% a year earlier. The upturn was mainly due to
strong exports and sustained growth in housing loans. The annual growth rate of loans to government
enterprises recorded a surge of 27.00% at the end of 2021, a sharp upturn from the 22.38% decline at
the end of 2020, as Taiwan Power Company and CPC Corporation increased borrowing from banks
to finance energy transition. In contrast, the annual growth rate of loans to government agencies
slid from 9.94% to 1.92% at the end of 2021, as the government collected more tax revenues and
issued more bonds, leading to a reduction in borrowing from banks.

In terms of loan composition, loans extended to the private sector and to government
enterprises accounted for 93.90% and 1.68% of total loans at the end of 2021, respectively, higher
than the 93.87% and 1.43% recorded at the end of 2020. Loans extended to government agencies
accounted for 4.43% at the end of 2021, lower than 4.70% at the end of the previous year.

Loans by Industry

Broken down by industry sector, bank loans to the manufacturing sector continued to account
for the largest portion, at 39.14% at the end of 2021 compared to 40.24% at the end of 2020, with
its annual growth rate up from 1.18% to 5.52%. This was mainly attributable to an increase in loans
extended to computers, electronic and optical products manufacturing spurred by rapid growth of
exports in 2021. Meanwhile, the share of loans extended to the construction industry continued to

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38
CBC Annual Report 2021

rise, with its annual growth rate up from 13.23% to 13.78% at the end of 2021, reflecting solid demand
for public infrastructure projects, and construction for residential property and new plants.

The share of loans extended to the real estate industry expanded; however, its annual growth
rate contracted as a result of soft demand and a higher base effect. In contrast, both the share and
the annual growth rate of loans extended to the wholesale and retail industry continued to rise on
account of stabilizing consumer demand and robust exports. Meanwhile, the share and the annual
growth rate of loans to the finance and insurance industry increased, as a buoyant stock market
and rising margin debt drove up demand for bank loans to boost working capital.

Consumer loans

The annual growth rate of consumer loans extended by banks increased from 8.96% at the end
of 2020 to 9.00% at the end of 2021. Among them, house-purchasing loans grew by NT$760.7 billion,
or 9.46%, in 2021 mainly because major economies maintained an accommodative monetary policy
stance owing to the COVID-19 pandemic and funds repatriation by overseas Taiwanese firms. As
for the shares of various types of consumer loans, house-purchasing loans remained the largest
component, with its share increasing from 84.13% at the end of 2020 to 84.48% at the end of 2021.
Car loans accounted for 1.74%, decreasing from 1.78%, mainly because of the chip and car parts
shortage caused by the pandemic. Meanwhile, house-repairing loans, revolving credit for credit
cards, employee welfare loans, and other consumer loans accounted for 0.52%, 0.96%, 0.51%, and
11.78%, respectively.

Portfolio Investment

Owing to valuation changes, portfolio investment by monetary financial institutions, measured

at fair value, recorded a year-on-year increase of NT$743.9 billion, while the increase was smaller, at
NT$723.4 billion, when measured on a cost basis.

Portfolio investment by monetary financial institutions, measured on a cost basis, grew at a

higher rate of 10.66% in 2021, mainly bolstered by major economies' accommodative monetary
policy stances as they were watchful of uncertainties relating to the COVID-19 pandemic and
ample liquidity in the domestic financial system.

In terms of tool types, banks and the Department of Savings and Remittances of Chunghwa
Post invested more in corporate securities in 2021 as they adjusted their asset allocations, seeking to
increase returns on investment amid persistently low interest rates. Government bonds accounted
for a share of 51.63%, lower than the 54.96% registered a year ago. At the end of 2021, commercial
paper accounted for a share of 20.43%, higher than a year ago. Corporate bonds accounted for a
share of 18.76%, increasing from the end of 2020.

39
 II. Financial Developments

Bank Interest Rates

As the Bank kept policy rates unchanged in 2021, domestic bank interest rates remained steady.
Regarding the interest rates of the five major domestic banks, their average fixed rates on one-
month and one-year time deposits, respectively, remained at 0.35% and 0.77% at the end of 2021.

In addition, the Bank announced in the December 2021 Board Meeting that if domestic price
inflation remains high, the industries affected by the COVID-19 pandemic have recovered steadily,
and interest rates in major economies are rising, the Bank will adjust its monetary policy as necessary
to meet its statutory obligations.

The weighted average rates on deposits and loans of domestic banks generally showed a
slightly downward trend in 2021. In the third quarter of 2021, the deposit rate declined to 0.35%
from 0.40% in the fourth quarter of the previous year, mainly owing to the increase in the share
of transaction deposits in total deposits and the reduction in the posted interest rate on deposits
by some banks. In the fourth quarter, the rate rose to 0.36% as some banks offered higher rates to
attract savers and some raised the rates for retiree-oriented deposit programs. On the whole, the
weighted average interest rate on total deposits of domestic banks was 0.36% in 2021, which was 0.09
percentage points lower than that recorded in the previous year.

As banks' rates on current operations loans declined in 2021, the weighted average interest rate
on new loans of the five major domestic banks decreased from 1.273% in the previous year to 1.200%
in 2021, down by 0.073 percentage points. Excluding central government loans, the weighted average
interest rate on new loans decreased from 1.302% in the previous year to 1.258% in 2021, down by 0.044
percentage points. Meanwhile, the average base lending rate remained at 2.442% at the end of 2021.

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40
CBC Annual Report 2021

In the third quarter of 2021, owing to :HLJKWHG$YHUDJH,QWHUHVW5DWHV

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previous year to 1.60%. In the fourth quarter,
the share of gover nment borrowings with

lower interest rates declined, but several 4 4 4 4 4 4 4 4 4 4
    
banks also launched low lending rate offers; 6RXUFH)LQDQFLDO6WDWLVWLFV0RQWKO\ )HEUXDU\ &%&

consequently, the weighted average rate

remained unchanged after taking into account
the weight of lending size. For the year as a whole, the weighted average interest rate on loans
of domestic banks was 1.60%, which was 0.08 percentage points lower than that recorded in the
previous year.

Because the decrease in the average deposit rate was more than that in the average lending
rate, the average interest rate spread between deposits and loans widened to 1.24 percentage
points in 2021, which was 0.01 percentage points more than that recorded in the previous year.

41
 II. Financial Developments

3. Money Market

For the year 2021, the total turnover in the interbank call loan market and short-term bills
market increased by 12.78% and 1.66%, respectively, over the previous year. With respect to money
market rates, as the Bank kept policy rates on hold during the year, the interbank overnight call
loan rate fluctuated in a narrow range and bills market rates broadly displayed a downtrend
before moving up later in the year.

Growth in Interbank Call Loans

With the global economy gradually recovering in 2021, exports registered solid growth and
private investment showed robust expansion. Against this backdrop, bank loans and investments
continued expanding year on year, leading to stronger demand for interbank call loans. Total
annual turnover of interbank call loans stood at NT$31,684.2 billion, increasing by NT$3,591.1 billion
or 12.78% over the previous year.

In terms of borrowers, domestic banks still made the largest contribution to total transactions
with a share of 81.52%, followed by bills finance companies, foreign and Mainland Chinese banks,
and Chunghwa Post, with shares of 8.92%, 6.84%, and 2.71%, respectively.

The amount borrowed by domestic banks grew by NT$3,993.7 billion or 18.29% from the year
before. The increase was mainly because banks' demand for interbank borrowing grew as they
tried to meet liquidity management needs against a backdrop of uneven distribution of funds
despite ample liquidity in the banking system.

On the other hand, as corporations and banks had greater demand for bills, bill transactions
increased, thereby reducing bills finance companies' demand for funds. The amount borrowed by
bills finance companies recorded a year-on-year decrease of NT$738.8 billion or 20.72%.

Meanwhile, the amount borrowed by foreign and Mainland Chinese banks dropped by
NT$113.4 billion or 4.97% over the previous year owing to their softer funding needs. The amount
borrowed by Chunghwa Post rose substantially by NT$449.6 billion or 109.51% compared with the
previous year because of a lower base effect.

With respect to lenders, domestic banks remained the largest supplier of funds, contributing
to 67.19% of total transactions in 2021. Foreign and Mainland Chinese banks came in second with
a share of 31.44%, followed by Chunghwa Post and bills finance companies making up 1.25% and
0.13% of total transactions, respectively.

42
CBC Annual Report 2021

To channel excess available funds at hand resulting from surging deposits boosted by
continued growth in exports, domestic banks increased interbank lending by NT$2,680.5 billion or
14.41% over the previous year.

As foreign and Mainland Chinese banks often carry out the custodian business for foreign
investors, the resulting net foreign capital inflows created a sufficient source of funds. Therefore,
the amount of call loans made by this group went up by NT$1,648.4 billion or 19.83% over the
previous year.

On the contrary, the amount of

call loans made by Chunghwa Post Composition of Interbank Call Loan Market
by Participant
fell by NT$744.9 billion or 65.36% from
2021 2020
a year before. The decrease was By Borrower By Lender
Unit : % Unit : %
primarily because its investments in
2.71 1.25
short-term bills or bonds with higher Chunghwa Post
1.46 4.06

yields led to less available funds at Bills Finance

8.92 0.13
12.69 Companies 0.12
hand.
6.84 Foreign and Mainland 31.44
8.12 Chinese Banks 29.59
As for bills finance companies,
the amount lent by this group 81.52 Domestic Banks 67.19
77.73 66.23
expanded by NT$713.6 billion or
100 80 60 40 20 0 0 20 40 60 80
21.44% over the previous year on
Source: Financial Statistics Monthly (February 2022), CBC.
account of sufficient funds at their
disposal.

In terms of maturity, interbank overnight call loans remained the most actively traded
instrument in the market with a predominant share of 51.82%, up by 11.42 percentage points from
that of the previous year. The second were those with a maturity of one week, sliding by 6.02
percentage points to 33.98% over the previous year, while the share of loans with a two-week
maturity also slipped by 2.91 percentage points to 10.22%.

Rise in Short-Term Bill Transactions

For the year 2021, newly issued short-term bills stood at NT$17,254.0 billion. Commercial paper
made up a dominant 93.35% of the new issues, followed by negotiable certificates of deposit (NCDs)
with a share of 4.69%.

The growth in the volume of newly issued short-term bills was mainly attributable to increased
issuance of commercial paper with an amount of NT$1,282.8 billion because government

43
 II. Financial Developments

enterprises and private enterprises issued commercial paper to raise funds amidst a persistently

low interest rate environment. The second largest contributor were banker's acceptances with a

rise of NT$4.9 billion over the previous year.

However, issuance of NCDs contracted by NT$22.2 billion from the previous year. This was

because, when part of the NCDs reached maturity, some banks did not renew the issuance

of NCDs after assessing their own funding conditions or corporate holders did not renew their

purchases in order to free up funds for other purposes. Meanwhile, the amount of treasury bills

shrank by NT$16.6 billion from a year before, primarily on account of a decrease in issuance to

support fiscal funding needs.

Overall, the amount of the total issuance of short-term bills was greater than that of the

total repayments for short-term bills. Therefore, the outstanding of short-term bills reached
NT$2,911.2 billion as of the end of 2021, representing an increase of NT$164.0 billion or 5.97%

from that of the previous year end.

Short-Term Bills Market

Unit: NT$billion
Negotiable
Banker's
Total Treasury Bills City Treasury Bills Commercial Paper Certificates
Acceptances of Deposit
Year
Year-End Year-End Year-End Year-End Year-End Year-End
Issues Issues Issues Issues Issues Issues
Outstanding Outstanding Outstanding Outstanding Outstanding Outstanding

2012 8,187.7 1,454.0 265.0 195.0 - - 7,311.6 1,023.6 24.2 4.3 586.9 231.1

2013 9,809.0 1,650.2 324.6 214.6 - - 8,827.4 1,199.2 23.5 4.2 633.5 232.3

2014 10,840.6 1,641.2 244.9 130.0 10.0 0.0 9,919.5 1,306.8 24.1 4.3 642.2 200.2

2015 11,512.8 1,677.7 233.7 90.0 - - 10,426.0 1,346.6 20.8 3.5 832.3 237.6

2016 12,778.5 1,873.5 217.3 90.0 - - 11,371.3 1,480.1 18.3 4.1 1,171.6 299.4

2017 14,878.5 2,154.5 220.0 25.0 - - 13,077.8 1,709.0 19.4 4.2 1,561.3 416.4

2018 14,971.9 2,223.1 160.0 30.0 - - 12,965.0 1,760.6 18.5 4.0 1,828.5 428.5

2019 14,927.3 2,353.2 314.0 65.0 - - 13,613.6 2,034.1 14.0 2.6 985.7 251.5

2020 16,005.2 2,747.2 336.6 125.0 - - 14,824.7 2,344.3 13.0 2.8 830.9 275.1

2021 17,254.0 2,911.2 320.0 115.0 - - 16,107.5 2,560.1 17.8 4.5 808.7 231.6
Source : Financial Statistics Monthly (February 2022), CBC.

The total tur nover of short-ter m bills in 2021 went up by NT$731.3 billion or 1.66% to

NT$44,872.2 billion. Of the total transactions, commercial paper still made up the lion's share of

95.81%, up by 0.6 percentage points from a year earlier. The second were NCDs with a share of

3.51%, 0.48 percentage points lower than the previous year. As for market participants, private

enterprises were still the largest player in the market with a dominant share of 47.59%, followed

by banks and bills finance companies with shares of 28.15% and 14.32%, respectively.

44
CBC Annual Report 2021

Slightly Fluctuating in Money Market Rates

In 2021, the weighted average interbank overnight call loan rate remained at low levels,

reflecting ample market liquidity. For the first eight months, the rate slightly fluctuated between

0.079% and 0.082%. In September, the Mid-Autumn Festival holidays and the quarter-end effect led

to greater market demand for funds. The interbank overnight call loan rate modestly trended up

to 0.086%.

From October onwards, the Double Tenth Day holidays and enterprises' dividend payouts

pushed up funding needs, yet market liquidity remained sufficient, and foreign investors net

bought on the Taiwan Stock Exchange (TWSE) for two consecutive months from November to

December, leading to net capital inflows. Therefore, the weighted average interbank overnight

call loan rate slightly fluctuated between

0.082% and 0.083% in the fourth quarter.
Money Market Interest Rates
The primary market rate on commercial Interbank overnight call loan rate
Primary market rate on 1-30 day commercial paper
paper with a maturity of 1-30 days fell from % Secondary market rate on 1-30 day commercial paper
0.8
0.42% in December 2020 to 0.34% in March

2021, and later rebounded to 0.45% in 0.6

December 2021. Meanwhile, the secondary

0.4
market rate on commercial paper with a

maturity of 1-30 days also slipped from 0.22% 0.2

in December 2020 to 0.19% in March 2021,

0.0
and rose back up to 0.29% in December 1 4 7 10 1 4 7 10 1 4 7 10
2019 2020 2021
2021. Source: Financial Statistics Monthly (February 2022), CBC.

Slide in Money Market Funds

In the year 2021, the size of money market funds experienced volatile changes. This was

because the TAIEX swung up, attracting more capital to flow into the TWSE. As a result, money

market funds, where institutional investors used to park short-term capital, recorded a smaller

size. At the end of 2021, there were a total of 36 money market funds in Taiwan and the total

assets stood at NT$851.4 billion with a decrease of NT$169.6 billion or 16.61% from the end of the

previous year.

In respect of portfolio composition, the largest use of funds was bank deposits with a share

of 51.35% at the end of the year. Following bank deposits were short-term bills and repurchase

agreements, accounting for 38.50% and 10.11% of the total money market funds, respectively.

45
 II. Financial Developments

Portfolio Composition of Money Market Funds

Unit: NT$billion

Year/Month Bank Deposits Short-Term Bills Repurchase Agreements Bonds

Total
End Amount Share (%) Amount Share (%) Amount Share (%) Amount Share (%)
2019 793.7 457.5 57.64 233.7 29.45 100.6 12.67 1.9 0.24
2020 1,021.0 556.1 54.47 346.4 33.93 117.1 11.47 1.4 0.14
2021 851.4 437.2 51.35 327.8 38.50 86.1 10.11 0.4 0.04
2021/ 1 1,081.7 569.5 52.65 386.3 35.71 124.4 11.50 1.5 0.13
2 1,096.9 574.6 52.38 393.2 35.85 127.3 11.60 1.8 0.16
3 1,072.6 574.7 53.59 393.6 36.70 102.7 9.58 1.5 0.14
4 1,089.8 602.1 55.25 383.0 35.14 102.9 9.44 1.9 0.17
5 1,007.2 581.8 57.77 340.8 33.84 82.2 8.17 2.3 0.22
6 957.5 556.6 58.13 318.2 33.23 80.8 8.44 1.9 0.20
7 984.7 551.6 56.02 340.3 34.56 90.9 9.23 1.9 0.19
8 994.5 557.6 56.07 346.8 34.87 89.1 8.96 1.0 0.10
9 920.4 534.4 58.06 316.1 34.35 69.0 7.49 0.9 0.10
10 877.0 499.8 56.99 298.0 33.97 78.9 8.99 0.4 0.04
11 869.7 477.6 54.92 309.4 35.58 82.3 9.46 0.4 0.04
12 851.4 437.2 51.35 327.8 38.50 86.1 10.11 0.4 0.04
Source: Securities Investment Trust & Consulting Association of the R.O.C.

46
CBC Annual Report 2021

4. Foreign Exchange Market

The NT Dollar Exchange Rate

On a daily average basis in 2021, the NT dollar depreciated slightly against the renminbi (RMB)
but appreciated against the Japanese yen, the US dollar, the Korean won and the euro. The trade-
weighted nominal effective exchange rate index of the NT dollar increased by 2.95% on a daily
average basis. The exchange rate movements of the NT dollar vis-à-vis each of the above foreign
currencies are analyzed as follows.

During the course of the year, the NT dollar against the US dollar appreciated broadly.
Early in the year, Fed Chair man Powell's remarks of continued commitment to monetary
accommodation and Taiwan's strong export performance combined to drive the NT dollar higher
against the US dollar. As US President Biden signed the US$1.9 trillion relief package into law on
March 11 and rising market optimism regarding a US economic recovery gave a further boost to
the US dollar, the NT dollar depreciated against the US dollar. In April, as the Fed reiterated that it
would maintain an easy monetary policy stance with the policy rate near zero and continued to
downplay inflation risk, the US dollar thus weakened and the NT dollar appreciated. Entering the
second half of the year, rising inflation led most Fed officials to forecast an earlier rate hike, and
late in September, the Fed decided to start tapering bond purchases later in 2021; this propelled
the US dollar higher and the NT dollar weakened. However, from late October, the NT dollar
appreciated against the US dollar as Taiwanese companies net sold US dollars. At the end of 2021,
the NT dollar appreciated by 2.95% against the US dollar compared with the end of the previous
year. On a daily average basis, the NT dollar appreciated against the US dollar by 5.55% in 2021.

Relative to the euro, the NT dollar broadly appreciated during 2021. Early in the year, the
COVID-19 pandemic worsened in Europe, which led investors to worry that the pace of the
economic recovery would moderate. Therefore, the ECB announced a faster pace of asset
purchases under the Pandemic Emergency Purchase Programme in March. In the second half of
the year, as economic growth in the euro area was hindered by the spread of new virus variants,
the ECB maintained an easy monetary policy stance by keeping its policy rates unchanged in
late October, and President Lagarde underscored that the possibility of a rate hike in 2022 was
very low. Because the pace of monetary policy normalization was slower than expectation among
investors, the euro continued on its downward trend, and the NT dollar appreciated continuously
against the euro. Compared with the end of the previous year, the NT dollar appreciated against
the euro by 11.86% at the end of 2021. On a daily average basis, the NT dollar appreciated against
the euro by 1.93%.

47
 II. Financial Developments

During the course of 2021, the NT dollar appreciated against the yen. In the first half of the year,
Japan's government declared a state of emergency several times in response to rising COVID-19
cases, and the BoJ continued to maintain its accommodative monetary policy. From August on,
higher commodity prices led to Japan running a trade deficit. Against this backdrop, combined
with sluggish consumption, the BoJ pledged to continue an extremely accommodative monetary
policy in October, and projected an inflation rate at well below its 2% target for two more years.
Late in December, BoJ Governor Kuroda reiterated that it was too early to move toward normalizing
monetary policy and maintained that the recent yen depreciation had more positive effects on
Japan's economy, thereby leaving the yen under downward pressure, which drove the NT dollar
against the yen to a yearly high of 0.2406. In sum, the NT dollar appreciated by 14.94% against
the yen at the end of 2021 compared with the previous year end. On a daily average basis, the
NT dollar appreciated against the yen by 8.50%.

In 2021, the NT dollar appreciated against the RMB in the first three quarters and depreciated
toward the year end. In early January, in an effort to dampen RMB strength, the PBoC raised
the upper limit on domestic non-financial firms' overseas lending to encourage capital outflows
and lowered the upper limit for non-financial firms' cross-border financing amid efforts to rein in
capital inflows. On May 31, the PBoC announced it would raise the reserve requirement ratio on
foreign currency deposits by 2 percentage points to manage forex liquidity and ease appreciation
pressure on the RMB. Later, China's tightening of pandemic control measures amid a wave of locally
transmitted infections and the expanded regulatory crackdown on technology businesses and other
sectors combined to weaken the RMB, resulting in the appreciation of the NT dollar against the RMB.
Later, the RMB reversed previous losses as China's exports exceeded expectations in October and
rebounded further following positive news of the virtual summit between US and China's leaders;
therefore, the NT dollar against the RMB veered to depreciation. In December, the PBoC reduced
the reserve requirement ratio for banks by 0.5 percentage points and cut its lending benchmark
loan prime rate (LPR) as it moved to stimulate a slowing economy that has been weighed down

Annual Changes of NTD Exchange Rate Against Major Currencies

NTD/USD NTD/EUR NTD/JPY NTD/CNY NTD/KRW

Exchange Rate (2021/12/30) 27.690 31.338 0.2406 4.3406 0.0233

Exchange Rate (2020/12/31) 28.508 35.056 0.2765 4.3592 0.0262

Annual Change 2.95% 11.86% 14.94% 0.43% 12.68%

Average Exchange Rate (2021) 28.022 33.143 0.2553 4.3452 0.0245

Average Exchange Rate (2020) 29.578 33.784 0.2770 4.2862 0.0251

Annual Change 5.55% 1.93% 8.50% -1.36% 2.31%

Source: Department of Economic Research, CBC.

48
CBC Annual Report 2021

by sluggish consumption recovery and a Percentage Changes of NT Dollar

prolonged property slump. In addition to
Against Major Currencies
( Compared with End-2020 )
dovish shifts, the PBoC raised the reserve USD/NTD JPY/NTD EUR/NTD
% CNY/NTD KRW/NTD
requirement ratio on foreign currency 16
NTD appreciation
deposits by 2 percentage points in an effort
12
to stem RMB strength, leading the NT dollar
8
to appreciate against the RMB. Overall, the
NT dollar slightly appreciated against the 4

RMB by 0.43% between end-2020 and end-

0
2021. On a daily average basis, the NT dollar
NTD depreciation
-4
depreciated by 1.36% against the RMB when 1 2 3 4 5 6 7 8 9 10 11 12
2021
compared with the previous year. Source: Department of Economic Research, CBC.

During the course of the year, the NT dollar

appreciated against the Korean won. Early in the year, the Korean economic outlook was clouded
by a still-high COVID-19 case number. Lingering COVID-related risks also prompted the Bank of
Korea (BoK) to stay accommodative, leading the NT dollar to appreciate against the Korean
won. In May, the NT dollar continued to appreciate against the won as the Korean currency was
weakened by large net foreign equity outflows. In the second half of the year, although two policy
rate hikes by the BoK in August and November in order to stem the rapid rise in property prices
and household borrowings bolstered the Korean won, supply shortages caused by China's export
curbs of urea as well as the rapidly deteriorating local pandemic situation led the Korean won
to weaken and maintained the NT dollar strength against the won. Compared with the end of
2020, the NT dollar appreciated by 12.68% against the Korean won at the end of 2021. On a daily
average basis, the NT dollar appreciated by 2.31% against the won in 2021.

Foreign Exchange Trading

Trading in the Taipei foreign exchange market decreased in 2021. Total net trading volume
for the year was US$8,188.1 billion, representing a 1.0% year-on-year decrease. The daily average
turnover was US$33.0 billion in 2021.

In terms of trading partners, transactions between banks and non-bank customers accounted
for 33.8% of the total turnover, while interbank transactions made up 66.2%, including 21.1% for
transactions among local banks and 45.2% for those between local banks and overseas banks.

As far as traded currencies were concerned, NT dollar trading against foreign currencies
accounted for 48.8% of the total trading volume, of which trading against the US dollar made
up a dominant 47.1%. Transactions in third currencies contributed to 51.2% of the total trading

49
 II. Financial Developments

Turnover of Major Products in the Taipei Foreign Exchange Market

Unit: US$million

Cross
Forex Margin
Year Spots Forwards Options Currency Total
Swaps Trading
Swaps

2017 2,826,236 423,119 3,550,558 12,402 242,537 43,934 7,098,786

2018 3,111,414 567,790 3,992,873 7,876 249,254 58,354 7,987,560

2019 3,079,471 661,954 4,007,094 6,430 213,734 45,308 8,013,990

2020 3,408,766 503,730 4,110,852 7,265 205,969 34,458 8,271,041

2021 3,584,473 507,641 3,839,404 4,733 222,705 29,134 8,188,090

2020-2021
Annual Growth Rate 5.2 0.8 -6.6 -34.9 8.1 -15.5 -1.0
(%)
Source: Department of Foreign Exchange, CBC.

volume, with trading in currency pairs of USD-RMB, Composition of Foreign Exchange

Transactions by Currency Pair
USD-euro, and USD-yen accounting for respective
2021 2020
shares of 16.1%, 11.3%, and 4.4%. Compared with Others Others
USD/RMB 19.5 % NTD/USD USD/RMB 18.3 % NTD/USD
2020, NT dollar trading against foreign currencies 16.1 % 47.1 % 14.3 % 48.2 %

decreased by 2.7% while transactions in third

currencies increased by 0.7%.

With respect to types of transactions, the USD/EUR NTD/Non-USD USD/EUR NTD/Non-USD

11.3 % USD/JPY 1.7 % 11.9 % USD/JPY 1.4 %
4.4 % 5.8 %
major types were foreign exchange swaps and
Source: Department of Foreign Exchange, CBC.
spots, accounting for 46.9% and 43.8% of total
turnover, respectively. Compared with 2020, the
trading volume of spots, forwards and options
increased, whereas those of the other types
decreased.

For other foreign currency derivatives, Composition of Foreign Exchange

Transactions by Type of Product
including forwards, swaps, and options based
2021 2020
on foreign currency interest rates, stock price Cross Cross
Margin Currency Margin Currency
Trading Options Swaps Trading Options Swaps
indices, commodity prices, and credit derivatives, 0.1 % 2.7 % 0.4 % Spots 0.1 % 2.5 % 0.4 % Spots
43.8 % 41.2 %
total turnover amounted to US$199.2 billion. Of
this amount, interest rate-related derivatives
accounted for the lion's share at 97.4% with
US$194.0 billion, increasing by 100.9% from the Foreign Forwards Foreign Forwards
Exchange 6.2 % Exchange 6.1 %
Swaps Swaps
previous year. Interest rate futures accounted for 46.9 % 49.7 %

the majority of this increase, up by US$69.5 billion. Source: Department of Foreign Exchange, CBC.

50
CBC Annual Report 2021

Turnover of Other Products in the Taipei Foreign Exchange Market

Unit: US$million

Commodity-
Interest Rate-Related Products Related
Products
Stock
Credit
Year Index Total
Foreign Derivatives
Interest Interest Options
Currency Commodity
Rate Rate Subtotal
Interest Options
Swaps Options
Rate Futures

2017 49,453 11,412 116,911 177,776 2,802 121 857 181,556

2018 78,848 25,974 149,310 254,132 3,524 403 2,861 260,920

2019 70,809 12,429 96,751 179,989 3,771 384 969 185,113

2020 52,113 9,580 34,882 96,576 3,087 147 399 100,208

2021 78,981 10,716 104,342 194,040 4,143 437 618 199,238

2020-2021
Annual Growth Rate 51.6 11.9 199.1 100.9 34.2 198.2 54.9 98.8
(%)

Note: "Forward Rate Agreements" is excluded from the table because the turnover has been 0 since 2017.
Source : Department of Foreign Exchange, CBC.

Renminbi Business

Renminbi investment tools became even more diversified during 2021. By the end of 2021, there

were 65 domestic banking units (DBUs) and 57 offshore banking units (OBUs) engaging in renminbi

business. The balance of renminbi deposits amounted to RMB231.9 billion; renminbi remittances totaled

RMB1,835.7 billion in 2021; renminbi settlement through the Taipei Branch of the Bank of China totaled

RMB5,291.0 billion.

Renminbi Business Conducted by Financial Institutions

Unit: RMB Billions

Business Items Amount

Deposit balance (including NCDs, end of 2021) 231.9

Total remittances (February 2013 to December 2021) 14,838.5

Total settlement through the Taipei Branch of the Bank of China

37,936.0
(February 2013 to December 2021)

Total value of 194 RMB-denominated bonds issued (as of the end of 2021) 132.7

Accumulated premium receipts from RMB-denominated

21.2
investment-linked insurance business (February 2013 to December 2021)

Accumulated premium receipts from RMB-denominated traditional

8.4
insurance business (April 2014 to December 2021)

Source: Department of Foreign Exchange, CBC.

51
 II. Financial Developments

Foreign Currency Call Loan & Swap Markets

The transaction volume in the foreign currency call loan market in 2021 was US$1,892.7 billion,
a decrease of 5.0% over the previous year. Of this amount, US dollar transactions accounted for a
dominant share with US$1,774.7 billion, making up 93.8% of the total while decreasing by 7.2% from 2020.
Renminbi transactions reached RMB561.2 billion in 2021, making up a share of 4.6% of the total and
recording a year-on-year rise of 27.3% in volume. Japanese yen transactions reached ¥1,902.6 billion in
2021, representing a small share of 0.9% of the total with a year-on-year increase of 398.6% in volume.
The amount of euro transactions amounted to around €1.7 billion, with a modest share of 0.1%. Other
currencies accounted for a combined 0.6% of the total transaction volume. The balance of foreign
currency call loan transactions at the end of 2021 was US$60.1 billion.

The volume of foreign currency-NTD swap transactions reached US$1,142.7 billion, 13.1% less than
2020, while the balance was US$301.4 billion at the end of 2021.

Transactions in the Foreign Transactions in the Foreign Currency

Currency Call Loan Market Swap Market
US$billion US$billion
2,500 1,600

1,400
1,892.7
2,000 1,142.7
1,200

1,500 1,000

800
1,000 600

400
500
200

0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Department of Foreign Exchange, CBC. Source: Department of Foreign Exchange, CBC.

OBU Assets

There were 59 OBUs at the end of 2021, with 36 of them operated by domestic banks and the
other 23 by foreign banks. The total assets of all OBUs increased to US$249.9 billion at the end of
the year, representing an increase of US$10.5 billion, or 4.4%, from the previous year end owing to
increasing portfolio investments and growing claims on financial institutions. Domestic bank OBUs
made up 90.8% of these combined assets with an amount of US$227.0 billion, and the OBUs of
foreign banks accounted for 9.2% of the total with US$22.9 billion.

In terms of the uses of funds, portfolio investments, at US$93.7 billion, represented the majority
share of 37.5% of total OBU assets. Loans to non-financial institutions came in second place,

52
CBC Annual Report 2021

accounting for 31.4% of total OBU assets. In terms of the destinations for funds, Asia accounted for
the majority with a share of 53.3%, followed by America at 30.4%.

The OBUs' main source of funds came from due to financial institutions, making up 50.0% of total
liabilities and equity. Deposits of non-financial institutions accounted for 41.8% of the total. The main
funding origin of OBUs was Asia, accounting for 64.8%, followed by America with a share of 25.2%.

Forex trading turnover of all OBUs increased by 7.8% to US$721.0 billion, of which US$441.3 billion
went for spot transactions, US$130.5 billion for forward transactions, and US$149.2 billion for forex
swap transactions. Compared with the previous year, the growth rates of trading of spots, forwards,
and forex swaps were 7.8%, 3.2%, and 2.8%, respectively.

For OBUs, total turnover of other derivatives products increased by 26.4% to US$310.8 billion
over the previous year. Of this amount, options transactions registered a turnover of US$142.7 billion,
making up 45.9% of the total.

Balance Sheet of OBUs in Banking System

Unit: US$million
Total
Loans to Claims on Assets= Deposits of Due to Other
Year / Month Portfolio Other Securities
Non-financial Financial Total Non-financial Financial Liabilities &
(End of month) Investment Assets Issued
Institutions Institutions Liabilities & Institutions Institutions Equity
Equity
2017/12 81,074 53,819 58,336 9,717 202,946 77,144 106,712 0 19,090
2018/12 82,161 59,180 48,552 11,074 200,968 78,704 96,622 0 25,641
2019/12 80,227 72,195 58,407 11,026 221,855 86,680 110,843 0 24,332
2020/12 78,995 86,016 61,925 12,524 239,459 91,094 124,885 0 23,480
2021/12 78,497 93,686 68,244 9,495 249,922 104,518 125,056 0 20,348
2020/12-2021/12
-0.6 8.9 10.2 -24.2 4.4 14.7 0.1 0.0 -13.3
Growth Rate (%)
Sources : 1. Financial Statistics Monthly (February 2022), CBC.
2. Department of Foreign Exchange, CBC.

53
 II. Financial Developments

5. Stock Markets

The TAIEX experienced fluctuations around a broad uptrend in 2021. Major downswings were
recorded in May, July, August, September, and October, mainly affected by a domestic flare-up in
COVID-19 infections, a day-trading tax policy indecision, China's property giant default crisis and
government "dual control" energy policy, and US inflation and debt ceiling concerns. In the other
months of the year, the TAIEX was bolstered by successful containment of domestic COVID-19
cases, record-breaking US stock bull runs, strong earnings of TWSE-listed companies, and robust
export growth, and swung up from a low at the start of the year to an all-year and all-time high of
18,248 points on December 29. The TAIEX closed the year at 18,219 points, rising by 23.7% over the
end of the previous year.

Most of the categories saw share price rises. Shipping and Transportation stocks posted the
largest gains of 168.6%, led by three major shipping companies whose profits doubled as global
freight indices and shipping prices stayed high. The second best performer was the Iron and Steel
category with a rise of 46.9% buoyed by international steel price upswings. Trading and Consumers'
Goods shares came in third with a 45.5% increase as consumers increased spending amid a boost
from the government's stimulus voucher scheme and a boom in online shopping. Overall, the

Major Statistics of the TWSE Market

Net Buying Positions

Stock Price Daily Turnover Market (NT$billion)
Average
Year/Month Index Trading Rate Capitalization Foreign Securities Securities
Value Investors Investment Dealers
Trust Companies
(end of period) (NT$billion) (%) (NT$billion) Net Buy/Sell Net Buy/Sell Net Buy/Sell

2019 11,997.1 109.4 80.4 36,413.5 244.2 11.3 52.5

2020 14,732.5 186.3 123.3 44,903.8 -539.5 42.7 -169.6
2021 18,218.8 378.2 176.6 56,282.0 -454.1 70.1 -96.4
2021/ 1 15,138.3 353.8 15.3 46,130.8 -113.1 7.4 -9.7
2 15,953.8 330.1 8.8 48,626.6 -80.1 4.4 -7.1
3 16,431.1 306.7 13.5 50,160.4 -150.9 16.7 -4.8
4 17,566.7 433.9 15.4 53,642.0 57.4 -6.3 8.5
5 17,068.4 507.7 20.5 52,150.2 -59.1 17.8 -28.5
6 17,755.5 470.1 18.2 54,314.2 -51.0 -4.9 29.1
7 17,247.4 549.3 22.9 52,893.6 -122.1 -18.9 -16.3
8 17,490.3 358.0 14.7 53,645.5 7.9 6.2 -13.4
9 16,934.8 289.5 11.1 52,052.8 5.7 9.7 -33.4
10 16,987.4 283.6 10.9 52,279.4 -57.4 17.4 -5.4
11 17,427.8 349.7 14.3 53,669.4 21.8 -0.1 -11.6
12 18,218.8 285.5 11.2 56,282.0 86.7 20.7 -3.7
Source: Securities and Futures Bureau, FSC.

54
CBC Annual Report 2021

daily average trading value on the TWSE reached a historical high of NT$378.2 billion in 2021 while
surging sharply by 103.0% over the previous year.

Regarding trends in over-the-counter trading of securities, the Taipei Exchange Capitalization

Weighted Stock Index (TPEX) rose by 29.0% at the end of 2021, compared to a year ago. Almost all
categories posted year-on-year increases, except for Tourism Industry shares with a 3.6% decline.
Shipping and Transportation shares gave the best per formance with a rally of 66.7%, closely
followed by Chemical shares with a 66.0% rise. In 2021, the daily average trading value on the
Taipei Exchange (TPEx) amounted to a historical high of NT$83.1 billion, rising by 68.4% from the
previous year.

The TWSE Market

Listings and Capitalization Both Increased to Record Highs

At the end of 2021, the number of TWSE listings increased by 11 over the previous year to a
total of 959. The par value of total shares rose by 2.0% year on year to NT$7.4 trillion, and total
market capitalization soared by 25.3% to NT$56.3 trillion. Meanwhile, the total number of Taiwan
depositary receipts (TDRs) decreased to 11 with two delisting during the year.

TAIEX Reached Historical High in Broad Uptrend

In early 2021, the TAIEX swung upwards as the US stock indices climbed to repeated record
highs, vaccination rates increased, TWSE-listed companies posted impressive earnings, and Taiwan's
exports expanded strongly, which helped to send the TAIEX to 17,596 points on April 27. However, a
surge in domestic COVID-19 infections and net stock selling by foreign investors caused the index
to dive to 15,354 points on May 17. Given the support from strong growth in exports and corporate
profits, the TAIEX quickly rebounded alongside
a US market rally, hitting an intermediate peak
TWSE and TPEx Indices
at 18,034 on July 15.
1966=100 TWSE (LHS) TPEx (RHS) 1995=100
18,500 250
Thereafter, the TAIEX faced downward
16,500 220
pressures created by surging COVID-19 Delta
variant cases, China's Evergrande default crisis 14,500 190

and energy policy tightening, US inflation and

12,500 160
debt ceiling problems, as well as a delayed
10,500 130
decision to continue the day-trading tax
incentive for the local stock markets, and 8,500 100
1 4 7 10 1 4 7 10 1 4 7 10
2019 2020 2021
swung lower towards an interim trough of
Sources: 1. TWSE.
16,342 points on August 20 and another interim 2. Taipei Exchange (TPEx).

55
 II. Financial Developments

TWSE Stock Price Changes by Industrial Group

% 2021 2020
180
168.6

80 77.2

60 56.5
53.1
46.9 45.5
39.1 36.5
40 33.2
23.7 29.7 28.0 29.2 29.3
22.8 25.7
21.6 19.3
20 15.3 17.9
13.9 12.4
9.4 8.7 7.8 10.7
7.4 6.5 6.4
1.4 3.0 0.6 1.9 2.5 3.4
0
-1.5 -1.1 -2.1 -2.1 -2.2 -3.6 -4.9 -1.0
-5.4
-20
TAIEX Shipping Iron Trading Glass Finance Electrical Others Chemicals Electronics Paper Textile Plastics Food Cement Building Electric Rubber Tourism Biotech Oil, Automobile
& & and & & & & Material Machinery & Gas
Transportation Steel Consumers’ Ceramics Insurance Cable Pulp & Medical and
Goods Construction Care Electricity

Source: TWSE.

trough of 16,348 points on October 13. However, bullish forces set in as the domestic coronavirus
situation remained well under control, US technology stocks hit fresh record highs, Taiwan's
statistical body upgraded the domestic GDP growth forecast, and foreign investors returned to
the TWSE market with net buying, pushing the TAIEX towards an all-time high of 18,248 points on
December 29. The index closed the year (on Dec. 30) at 18,219 points, up by 23.7% compared to
14,733 points at the end of 2020.

Broken down by subcategory, most industrial groups rose from the previous year, except for
four categories, namely Automobile, Oil, Gas & Electricity, Biotechnology & Medical Care, and
Tourism. Among the gaining groups, Shipping and Transportation increased the most by 168.6%,
as the unresolved problems of port congestion and container shortage continued to buoy
international freight indices and shipping prices, thereby helping the TWSE's top three shipping
heavyweights to record significant growth in profits and witness share price surges. Iron and
Steel stocks had the second biggest increase by 46.9%, buttressed by an international steel price
upswing. Trading and Consumers' Goods rose by 45.5% as the stimulus voucher scheme and online
shopping boom spurred domestic consumption. Glass and Ceramic shares posted an increase of
39.1% with glass prices climbing. Finance and Insurance shares were 33.2% higher than the previous
year, benefiting first from domestic banks making handsome profits as the government's SME
guarantee fund helped sustained a sound lending business operation amid the pandemic, and
also from a net buying by foreign investors.

Among the declining categories, Automobile shares dropped the most by 4.9% because car
chip shortages caused new car delays and sales slumps. Oil, Gas and Electricity shares fell by

56
CBC Annual Report 2021

3.6%, mainly dented by the plunge in Formosa Petrochemical Corporation, one of the category's

heavyweight stocks, after foreign investor selloffs. Biotechnology and Medical Care was down

by 2.2%, attributable to the weak performance in the NASDAQ Biotechnology Index. In addition,

Tourism stocks dropped for a second consecutive year by 2.1% as the pandemic continued to

weigh on the industry.

Market Turnover Increased Significantly

Underpinned by ample liquidity and active participation (demonstrated by record high

numbers of wholesale and retail investors and new portfolio accounts opened), the TWSE daily

average trading value amounted to a historical high of NT$378.2 billion, increasing by 103.0%

from the previous year's NT$186.3 billion. The turnover rate also rose from 123.3% to a new record

high of 176.6%.

Foreign Investors Net Sold

In 2021, foreign investors net sold TWSE stocks by an amount of NT$454.1 billion. Meanwhile,

local securities investment trust companies posted a net purchase of NT$70.1 billion, whereas local

securities dealers posted a net sale of NT$96.4 billion.

In the first three months into 2021, international stock markets dipped and US government

bond yields trended up, leading foreign investors to post monthly net sales of TWSE shares, followed

by a net purchase in April on the back of huge capital inflows as US bond yields fell lower. In the

months from May to July, foreign investors turned net sellers again owing to a domestic COVID-19

flare-up and profit-taking trades. They net bought financial stocks in August and September, citing

robust earnings reports by banks. In October, investor fears of an earlier-than-expected rate hike

by the Fed to counter rising inflation pulled foreign capital out of the TWSE. Thereafter, a US tech

rally towards new highs prompted foreign investors to also increase holdings of Taiwan's electronics

shares, thus posting net purchases in both November and December.

Local securities investment trust companies were net sellers in April, June, and July through

November, during which they offloaded shares to secure gains in order to meet fund redemption

demand, to boost their financial statements, or to adjust portfolios at higher price levels. In the

other months, they posted net purchases.

Local securities dealers, with inclination for short swing trading, net bought in April and June

amid market uptrends. In the other months of the year, they net sold as a result of hedging or

profit-taking strategies.

57
 II. Financial Developments

The TPEx Market

Listings and Capitalization Both Increased

At the end of 2021, the number of TPEx listings rose by 6 from the previous year to 788. The
total par value increased by 2.5% to NT$760.9 billion. The TPEx market capitalization, buoyed by
rising stock valuations, increased to NT$5.78 trillion with a surge of 32.9%.

TPEx Index Swung to Record High

In 2021, the TPEx market exhibited trends similar to those in the TWSE market. Except for May and
August when the domestic virus flare-up and day-trading policy indecision pummeled the TPEX, the
index was broadly on an uptrend from a low at the start of the year to an all-year, all-time high of
237.6 points at the end of 2021, rising by 29.0% from 184.1 points a year ago.

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By category, all groups posted year-on-year gains, except for Tourism with a 3.6% drop as the

pandemic brought this group another price decline for the second consecutive year. Among the top

performers, Shipping and Transportation enjoyed a 66.7% gain thanks to elevated global freight rates

and the persistent strength of the three major TWSE-listed shipping heavyweights. Chemical shares

followed closely with a 66.0% increase as chemical products were bolstered by the international oil

price upswing.

By type of institutional investor, foreign investors and local securities investment trust companies

net bought TPEx securities worth NT$23.5 billion and NT$31.1 billion, respectively, while local dealers

net sold NT$1.8 billion.

58
CBC Annual Report 2021

With a record participation of 3.32 million active investor accounts in the year of 2021, the TPEx

daily average trading value reached NT$83.1 billion, a new record in market history while surging by

68.4% from the previous year's NT$49.3 billion.

Key Measures for the Stock Markets

Key measures for Taiwan's stock markets in 2021 included the following:

(1) March 12: The Financial Supervisory Commission (FSC) announced that securities firms would be
allowed to provide sub-brokered business services that invest in foreign futures contracts linked to
Taiwan's stock index (e.g., SGX FTSE Taiwan Index Futures).

(2) May 4: The FSC announced that securities firms would be allowed to accept customer orders
to trade foreign securities under a systematic investment plan, investing in foreign stocks and in
exchange traded funds (ETFs) that do not have a leveraging or shorting effect.

(3) July 20: The TPEx launched the Pioneer Stock Board (PSB) in the Emerging Stock Market. The PSB,
whose trading mechanism is mostly identical to that in the TPEx main board market, is aimed at
fostering the development of and facilitating the funding for innovative industries.

(4) August 19: The Executive Yuan passed the amendment to the Securities Transaction Tax Act,
extending the tax cut on day-trading transactions to keep the current 1.5‰ tax rate in place through
December 31, 2024.

(5) August 27: The TWSE introduced an alert mechanism to draw investors' attention to stocks involved
with massive day trading activity. A security would be noted and announced as an "attention
security" if (a) in the most recent six business days, its day trading volume as a percentage of its total
trading volume exceeds 60%, and (b) in the current intraday trading session, its day trading volume
as a percentage of its total trading volume also exceeds 60%.

59
 II. Financial Developments

6. Bond Market

For the year 2021, the total volume of bond issuance registered a marked decrease. New
issues of bonds amounted to NT$2,690.6 billion, decreasing by NT$704.2 billion or 20.74% over the
previous year. At the end of 2021, the total outstanding of bonds issued stood at NT$15,946.7 billion,
rising by NT$1,162.0 billion or 7.86% from the previous year end.

To support debt refinancing operations of the Central Government Debt Service Fund and to
raise funds for the central government general budget and special budget, issuance of central
government bonds reached NT$617.0 billion for 2021, an increase of 15.33% from the previous year.

Issuance of corporate bonds and bank debentures in the year fell by 14.11% and 29.58% to
NT$723.7 billion and NT$135.2 billion, respectively. The decreases were mainly because an upswing
in benchmark government bond yields amid robust domestic economic growth brought up
market rates, leading corporations and banks to reduce the volume of bond issuance.

In 2021, NT dollar-denominated foreign bonds issued in Taiwan by foreign institutions stood at

NT$10.6 billion, representing a substantial decrease of 50.77% over the previous year. As for foreign
currency-denominated international bonds issued in Taiwan by foreign institutions, the volume of
issuance posted a year-on-year decrease of 35.49% to NT$1,137.5 billion.

In the secondary market, the yield on 10-year government bonds averaged 0.436% for the
entire year, five basis points lower than the previous year. Nevertheless, annual average yields on
bonds with different maturities displayed a broad uptrend in 2021, in contrast to the downtrend in
the previous year.

In addition, annual transactions totaled NT$36,138.8 billion, contracting significantly by 31.17%

compared to the previous year, mainly reflecting a less vibrant bond market because of narrowing
profits from spread trading.

Rise in Government Bond Issuance

Central government bond issuance recorded a year-on-year increase of NT$82.0 billion or

15.33% to NT$617.0 billion in the year 2021. The growth was to support debt refinancing operations of
the Central Government Debt Service Fund and to raise funds for the central government general
budget and special budget.

Among the total volume of government bonds issued by the Ministry of Finance, 10-year bonds
made up the lion's share with NT$210.0 billion, followed by 5-year bonds with NT$120.0 billion. 2-year,

60
CBC Annual Report 2021

7-year, 20-year, and 30-year government bonds recorded issuance of NT$60.0 billion, NT$32.0 billion,
NT$130.0 billion, and NT$65.0 billion, respectively.

Broken down by institutional investor, bonds held by the banking industry (including Chunghwa
Post) accounted for the largest share at 64.62% primarily on account of an increase in demand for
government bonds by Chunghwa Post. The
securities industry came in second with a share
of 22.01%, similar to that in the previous year. Shares of Government Bond Holdings
(by Institutional Investor)
Meanwhile, the insurance industry made up a
End of 2021 End of 2020
share of 10.74%, smaller than the previous year Insurance Insurance
Industry Industry
Bills Finance Banking Bills Finance Banking
because the insurance industry increased its Companies 10.74 % Industry Companies 25.65 % Industry
2.63 % 64.62 % 3.07 % 49.06 %
external investment position owing to a larger
yield spread between the US and Taiwan
government bonds.
Securities Securities
Industry Industry
As of the end of 2021, the total outstanding 22.01 % 22.21 %

of central government bond issuance stood Source: Department of the Treasury, CBC.

at NT$5,674.5 billion, rising by NT$150.0 billion or

2.72% from the previous year end.

With respect to bonds issued by governments of special municipalities, new bonds issued
by the government of Taipei Special Municipality and the government of Kaohsiung Special
Municipality in 2021 reached NT$30.0 billion and NT$36.6 billion, respectively, with a combined
amount of NT$66.6 billion. At the end of the year, the outstanding amount of bonds issued by the
governments of all special municipalities stood at NT$164.9 billion, expanding considerably by
NT$64.9 billion or 64.89% from the previous year end.

Decrease in Corporate Bond Issuance

Corporate bonds refer to NT dollar- or foreign currency-denominated bonds issued in Taiwan

by domestic corporations. In 2021, the issuing amount of corporate bonds stood at NT$723.7 billion,
sliding by NT$118.8 billion or 14.11%. The decrease was mainly because an uptick in benchmark
government bond yields sent market rates higher, thereby slightly reducing corporations' demand for
bond issuance.

In terms of bond maturities, 5-year corporate bonds accounted for a dominant share of the
issuance at 50.92%, while 7-year bonds came in second with a share of 26.40%. At the end of 2021,
the outstanding amount of corporate bonds grew by NT$390.7 billion or 15.07% to NT$2,983.5 billion
from the previous year end.

61
 II. Financial Developments

Issues and Outstanding Values in Bond Market by Category

Unit: NT$billion
Central Government Local Government Beneficiary
Year/ Total Corporate Bonds Bank Debentures Foreign Bonds Int'l Bonds
Bonds Bonds* Securities**
Month
Issues Outstanding Issues Outstanding Issues Outstanding Issues Outstanding Issues Outstanding Issues Outstanding Issues Outstanding Issues Outstanding

2019 1,808.3 13,872.3 410.0 5,483.3 33.8 67.7 402.8 2,113.4 162.2 1,313.7 5.3 8.4 17.5 26.7 776.5 4,859.2
2020 3,394.9 14,784.7 535.0 5,524.5 40.5 100.0 842.5 2,592.8 192.0 1,255.7 0.0 5.3 21.5 44.6 1,763.3 5,261.8
2021 2,690.6 15,946.7 617.0 5,674.5 66.6 164.9 723.7 2,983.5 135.2 1,234.0 0.0 5.3 10.6 51.6 1,137.5 5,833.0
2021/ 1 362.0 15,086.7 70.0 5,594.5 10.0 110.0 36.0 2,609.1 3.0 1,243.3 0.0 5.3 0.6 45.0 242.4 5,479.5
2 219.0 15,125.7 65.0 5,599.5 0.0 110.0 1.2 2,606.5 9.3 1,247.6 0.0 5.3 0.0 44.8 143.5 5,512.1
3 138.4 14,999.5 25.0 5,514.5 0.0 110.0 29.6 2,622.0 3.0 1,221.1 0.0 5.3 0.0 44.4 80.9 5,482.2
4 265.6 15,160.1 30.0 5,544.5 22.9 132.9 63.3 2,655.0 7.8 1,209.6 0.0 5.3 0.0 44.3 141.6 5,568.5
5 244.8 15,287.0 60.0 5,574.5 0.0 132.9 91.8 2,723.7 22.4 1,219.5 0.0 5.3 0.5 44.8 70.2 5,586.4
6 249.4 15,338.0 55.0 5,569.5 0.0 132.9 98.4 2,767.6 3.0 1,206.9 0.0 5.3 0.0 44.4 93.1 5,611.5
7 216.6 15,465.4 30.0 5,599.5 0.0 132.9 45.2 2,767.0 2.5 1,206.9 0.0 5.3 0.3 44.6 138.5 5,709.2
8 237.9 15,651.0 97.0 5,696.5 0.0 132.9 99.0 2,839.2 14.1 1,215.3 0.0 5.3 0.0 44.1 27.8 5,717.7
9 224.0 15,699.8 65.0 5,654.5 0.0 132.9 101.4 2,915.2 10.5 1,207.8 0.0 5.3 0.0 43.9 47.2 5,740.2
10 215.4 15,829.5 30.0 5,654.5 20.0 151.2 51.3 2,944.9 14.6 1,215.6 0.0 5.3 2.1 45.7 97.4 5,812.3
11 119.0 15,815.8 30.0 5,614.5 13.7 164.9 27.2 2,942.3 18.3 1,229.2 0.0 5.3 1.1 46.6 28.6 5,813.0
12 198.4 15,946.7 60.0 5,674.5 0.0 164.9 79.4 2,983.5 26.8 1,234.0 0.0 5.3 6.0 51.6 26.3 5,833.0
Notes: * Referring to bonds issued by governments of special municipalities.
** Including those purchased back by originators for credit enhancement.
Sources:1. Financial Statistics Monthly (February 2022), CBC.
2. Banking Bureau, Financial Supervisory Commission.
3. Department of Foreign Exchange, CBC.

Reduction in Bank Debenture Issuance

In 2021, domestic banks issued bank debentures in support of their funding needs, with an
issuance amount of NT$135.2 billion, down by NT$56.8 billion or 29.58% over the previous year. The
contraction was largely because market rates went up owing to rising benchmark bond yields,
leading to reduced senior bank debenture issuance by banks.

In respect of the maturity of new issues, perpetual debentures made up the largest share of
total issuance at 40.47%, while 7-year, 5-year, and 10-year debentures accounted for 20.81%, 19.70%,
and 16.47%, respectively. Debentures of the other maturity ranges made up a marginal share of 2.94%.

At the end of the year, the outstanding amount of bank debentures totaled NT$1,234.0 billion,
representing a year-on-year decrease of NT$21.7 billion or 1.73%.

Asset Securitization Products Remained Unchanged

New issues of asset securitization products were nil in 2021 and no principal was repaid for
existing asset securitization products. The outstanding amount of asset securitization remained at
NT$5.3 billion from the previous year end.

62
CBC Annual Report 2021

Slide in Foreign Bond Issuance

Foreign bonds are defined as NT dollar-denominated corporate bonds issued in Taiwan by foreign

enterprises. For the year 2021, foreign bond issuance dropped substantially by NT$10.9 billion or 50.77%

from a year before to NT$10.6 billion. The decrease mostly reflected a higher base effect resulting

from the NT$15.0 billion worth of green bonds issued in Taiwan by a Danish energy company, Ørsted,

in the previous year. At the end of the year, the outstanding amount of foreign bonds reached

NT$51.6 billion, increasing by NT$7.0 billion or 15.64% over the previous year end.

Drop in International Bond Issuance

International bonds currently refer to foreign currency-denominated corporate bonds issued in

Taiwan by foreign institutions. During 2021, issuance of international bonds fell by NT$625.8 billion or

35.49% from a year before to NT$1,137.5 billion. The contraction was primarily because a rebound in

US Treasury yields led to a decrease in US dollar-denominated bond issuance. At the end of the year,

the outstanding amount of international bonds stood at NT$5,833.0 billion, representing a year-on-

year increase of NT$571.2 billion or 10.86%.

Uptrend in Average Government Bond Yields and Decline in Transactions

Despite a surge in US inflation bringing up US Treasury yields, Taiwan government bond yields

recorded a smaller increase than US bond yields owing to ample domestic liquidity. Government

bond yields, in contrast to the downtrend in the previous year, displayed a broad uptrend in 2021,

whereas the trading volume of the secondary government bond market for the past two years

trended downward. Looking at the volume-weighted average yields, the 10-year government bond
yield modestly slid and averaged 0.436%, five basis points lower than the 0.483% of the previous year.

Among government bonds of the other maturity ranges, average yields on 5-year, 7-year,

15-year, and 20-year bonds in the year moved down by eight, six, two, and three basis points,

respectively, over the previous year.

On the other hand, the average yield on 30-year bonds in 2021 went up by 31 basis points

compared to the previous year. This was because 30-year bonds were mainly issued in the primary

market. However, the issuance of 30-year bonds during the year only occurred in February and

December. An uptrend in market rates in the year brought the 30-year bond yield of December

markedly higher than that of February. In addition, the trading volume of December was also larger

than that of February. As a result, when looking at the volume-weighted average yields, the average

yield on 30-year bonds in 2021 was higher than the previous year.

63
 II. Financial Developments

Yields on Central Government Bonds

with Different Maturities Yield Curve of Central Government Bonds
% 5-year Bonds 10-year Bonds 20-year Bonds % 2021 2020
1.6 1.2

1.0
1.2

0.8
0.8
0.6

0.4
0.4

0.0 0.2
1 4 7 10 1 4 7 10 1 4 7 10 5 7 10 15 20 30
2019 2020 2021 Maturity (years)

Source: Taipei Exchange (TPEx). Source: TPEx.

In terms of transaction volume, annual transactions fell by NT$16,366.0 billion or 31.17% to

NT$36,138.8 billion for the entire year as narrower yield spreads led to a less vibrant domestic bond
market.

By type of bonds, the majority of total bond transactions went for corporate bonds with a share
of 47.47% and an annual trading volume of NT$17,155.4 billion. The second most actively traded
were government bonds, contributing to 43.05% of total transactions with an annual trading volume
of NT$15,557.9 billion. Bank debentures came in third, accounting for a smaller share of 5.60% with an
annual trading volume of NT$2,024.9 billion.

Turnover in Bond Market by Category

Unit: NT$billion

Year/ Government Corporate Bonds Bank Beneficiary Foreign

Total Int'l Bonds
Month Bonds Nonconvertible Convertible Debentures Securities Bonds

2019 57,888.5 35,896.7 17,103.2 1,051.9 2,713.1 17.7 168.4 937.5

2020 52,504.7 28,776.6 17,254.7 1,297.6 2,891.9 2.1 434.9 1,846.9
2021 36,138.8 15,557.9 15,807.2 1,348.2 2,024.9 0.5 393.0 1,007.0
2021/ 1 3,632.9 1,870.7 1,274.8 103.9 176.1 0.0 29.0 178.4
2 2,562.7 1,227.8 902.5 76.3 141.9 0.0 22.2 191.9
3 3,455.1 1,673.4 1,339.4 112.6 191.9 0.0 31.1 106.8
4 2,834.9 1,215.8 1,216.3 115.9 163.7 0.0 33.5 89.6
5 2,904.0 1,166.7 1,317.8 126.6 185.3 0.0 34.2 73.4
6 2,803.7 1,130.6 1,326.5 101.3 161.0 0.0 25.4 58.9
7 2,791.5 1,122.6 1,311.6 109.4 165.5 0.0 32.1 50.4
8 3,152.2 1,365.6 1,424.0 112.5 167.7 0.0 31.6 50.7
9 3,057.3 1,263.2 1,438.5 105.1 159.0 0.0 31.1 60.4
10 3,014.6 1,302.9 1,345.2 109.7 158.3 0.0 37.0 61.5
11 2,870.9 1,099.9 1,378.1 146.8 176.3 0.0 35.3 34.5
12 3,059.0 1,118.8 1,532.4 128.1 178.2 0.5 50.5 50.4
Source: TPEx.

64
CBC Annual Report 2021

Central Bank Operations

65
 III. Central Bank Operations

III. Central Bank Operations

1. Overview

The global economy continued on the path of recovery in the year 2021 amid lingering
downside risks. Domestic inflation pressures built up further, whereas overall price trends were still
considered manageable. Meanwhile, Taiwan's economy witnessed robust growth, albeit with
divergence among different sectors. Against such a backdrop, the Bank held the policy rates
unchanged to help safeguard price and financial stability and foster economic growth.

To help small and medium-sized enterprises (SMEs) adversely impacted by the COVID-19
pandemic, the Bank launched the Special Accommodation Facility to Support Bank Credit to SMEs
("the Facility") in April 2020. In mid-2021, with a surge in coronavirus infections at home, in order to
enhance funding access for SMEs, the Bank continued its rolling review on the Facility and made
relevant adjustments such as raising the total amount available under the Facility. Later, with the
domestic coronavirus outbreak largely stable, corporate needs for relief funding declined. Therefore,
the deadline for banks to accept new SME loan applications under the Facility remained December
31, 2021, as scheduled. However, to continue helping alleviate corporate financial burdens by
supporting low funding costs, SME loans granted by banks under the Facility would remain eligible
for the Facility's preferential interest rates until June 30, 2022.

In addition, to promote financial stability, rein in financial institutions' credit risk associated with
real estate lending, and curb inordinate flows of credit resources towards the property market, the
Bank amended the Regulations Governing the Extension of Mortgage Loans by Financial Institutions
in March, September, and December 2021, to adjust its selective credit control measures. In order to
reinforce the effectiveness of these control measures, the Bank held meetings twice to urge banks to
comply with credit risk-based pricing principles when extending mortgage loans. Moreover, the Bank
also adopted relevant supporting measures.

In response to economic and financial conditions, the Bank continued to conduct open
market operations by issuing CDs to manage market liquidity and reserve money so as to
maintain liquidity in the banking system and market rates at appropriate levels and sustain
steady growth in monetary aggregates. For the year as a whole, reserve money and the
monetary aggregate M2 registered year-on-year growth of 12.18% and 8.72%, respectively.
Both readings were higher than the GDP growth rate of 6.45% over the same period, indicating
sufficient market liquidity to support economic activity.

In the foreign exchange (FX) market, bolstered by the US government's US$1.9 trillion fiscal

66
CBC Annual Report 2021

stimulus package and solid growth in Taiwan's exports in the first half of 2021, the NT dollar
appreciated against the US dollar and exhibited greater volatility. In the second half of the year, the
US Fed adopted monetary policy tightening and Taiwan's exports continued to record significant
expansion, resulting in the NT dollar against the US dollar fluctuating within a limited range. When
the NT dollar exchange rate experienced more fluctuations, the Bank, in line with its statutory
mandates, stepped into the FX market through two-way interventions as warranted to maintain
dynamic stability of the NT dollar exchange rate, with a net buying of US$9.1 billion for the year. In
2021, compared with other major currencies (including the Singapore dollar, the euro, the yen, and
the Korean won), the NT dollar experienced lower volatility in its exchange rate vis-à-vis the US dollar.
Moreover, in addition to approving more bank branches as authorized FX banks, the Bank reviewed
the laws and regulations governing FX business as seen fit so as to facilitate authorized FX banks'
competitiveness and service quality.

In order to ensure business continuity of the payment and settlement systems amid the COVID-19
pandemic, the Bank continued urging financial institutions to take precautionary measures in case
of pandemic-related contingencies. Furthermore, considering marked growth in interbank retail
payment transactions, the Bank raised the ceiling on the amount of financial institutions' end-
of-day balance in the Interbank Funds Transfer Guarantee Special Account8 to be counted as
part of the required reserves. The Bank also required the Financial Information Service Co., Ltd.
(FISC) to collaborate with financial institutions in reinforcing mobile payment infrastructure, such
as constructing an "inter-institutional electronic payment institutions platform" and launching the
"mobile number funds transfer" service to promote mobile payment. In the meantime, in response to
the evolving trend of the digital economy, the Bank has conducted research on central bank digital
currencies (CBDCs) and has moved on to the second phase with a proof-of-concept (PoC) study on
a general purpose CBDC, which will be completed in September 2022.

To assist the domestically-oriented services sector battered by the pandemic and boost private
consumption, the government rolled out the Quintuple Stimulus Voucher program, effective from
October 8, 2021. The Central Engraving and Printing Plant, a subsidiary of the Bank, was instructed by
the government to design and print the vouchers from August and later completed the production
of 19.5 million sets of paper vouchers in mid-October. Through this program, the Bank joined a
concerted effort in helping stimulate domestic consumption.

8 Authorized financial institutions may jointly open an Interbank Funds Transfer Guarantee Special Account with the Bank. The funds in the Special Account serve
as guarantee for clearing individual interbank retail payments.

67
 III. Central Bank Operations

2. Monetary Management

Holding Policy Rates Steady

The global economy continued to recover amid potential downside risks in the year 2021.
Meanwhile, domestic inflation pressures built up further, yet the overall price increase was still viewed
as manageable. Taiwan's economy exhibited robust growth, albeit with uneven recovery momentum
across sectors. Against this backdrop, the Bank kept policy rates unchanged in 2021. The discount
rate, the rate on refinancing of secured loans, and the rate on temporary accommodations
remained at 1.125%, 1.5%, and 3.375%, respectively.

Continuing to Conduct Open Market Operations to Absorb Excess Liquidity

In 2021, the Bank continued to manage market liquidity through open market operations by
issuing CDs in response to domestic economic and financial conditions, which helped to maintain
reserve money and market rates at appropriate levels.

(1) Appropriately Managing Reserve Money

The Bank continued to conduct open market operations by issuing CDs. At the end of 2021, the
total outstanding amount of CDs issued by the Bank was NT$9,483 billion. Reserve money grew by
12.18% for the year 2021, 3.59 percentage points higher than the previous year's figure. In terms of
the monthly movements of reserve money, the annual growth rates of reserve money for January
and February are often more volatile as the exact timing of the Lunar New Year holidays shifts on
the Gregorian calendar each year. In 2021, reserve money posted an annual growth rate of 11.38%
during this period. From March onwards, the annual growth rate remained relatively stable. Later,
despite displaying a downtrend from October
to December owing to a higher base effect,
5HVHUYH0RQH\
the annual growth rate of reserve money still
$YHUDJHVRI'DLO\)LJXUHV
remained above 10%. 17ELOOLRQ $PRXQW /+6 $QQXDO*UZRWK5DWH 5+6 
 

On the demand side, reserve money, 

measured on a daily average basis, increased  

by NT$554 billion over the previous year. Of 

 
the components, net currency increased by

NT$272 billion and the annual growth rate
 
rose to 11.99% from 9.17% the previous year;

reserves held by financial institutions expanded
 
           
by NT$282 billion, with the annual growth rate   

trending up to 12.37% from 8.02% the previous 6RXUFH)LQDQFLDO6WDWLVWLFV0RQWKO\ )HEUXDU\ &%&

68
CBC Annual Report 2021

year. Currency held by the non-bank public &KDQJHVLQ5HVHUYH0RQH\

expanded further on account of an increase $YHUDJHVRI'DLO\)LJXUHV
17ELOOLRQ  
in the private sector's demand for currency 

amid a steady recovery in the domestic


economy and the low interest rates paid on

bank deposits enhancing the willingness to

hold currency in hand. Meanwhile, the overall
growth rate of banks' reserves increased 

compared to the previous year as continuous 

growth in deposits raised banks' demand for 

&KDQJHV &KDQJHV &KDQJHV
reserves. LQ5HVHUYH0RQH\ LQ1HW&XUUHQF\ LQ5HVHUYHV+HOG
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From the supply side perspective, reserve
money increased by NT$513 billion at the
end of the year. According to the balance sheet of the Bank revealing the sources of changes
in reserve money, increases were mostly attributable to the growth in foreign assets held by the
Bank and expanded claims on financial institutions, whereas decreases were due to the Bank's
issuance of CDs.

(2) Overnight Call Loan Rate Broadly Stable ([FHVV5HVHUYHVDQG

2YHUQLJKW&DOO/RDQ5DWH
In response to the demand for asset ([FHVV5HVHUYHV /+6 2YHUQLJKW&DOO/RDQ5DWH 5+6
17ELOOLRQ 
allocation of financial institutions, the Bank  

increased the monthly bidding amount for

 
2-year CDs from NT$40 billion to NT$60 billion
 
from February 2021 and raised it further to
 
NT$80 billion from April before reducing it to
NT$60 billion from November onwards. The  

annual average excess reserves of financial  

institutions in 2021 was NT$62.7 billion, close

 
           
to the NT$62.5 billion of the previous year.   

The annual average overnight call loan rate 6RXUFH)LQDQFLDO6WDWLVWLFV0RQWKO\ )HEUXDU\ &%&

fluctuated slightly at around 0.080%.

(3) Conducting Regular Small-Scale Repo Operations

The Bank conducted small-scale test repo operations on CDs and government bonds in April
and October 2021, respectively, to improve operational readiness and ensure resilience of the open
market operations.

(4) Continuous Growth in Monetary Aggregates

The government provided relief loans in response to the economic impacts of the pandemic

69
 III. Central Bank Operations

in the previous year. Subsequently, marked domestic economic recovery and stronger corporate
demand for funds nudged up bank loans and investments. Moreover, as extended export strength
continued to buttress an increase in inward remittances of overseas sales revenues, M2 recorded
an annual growth rate of 8.45% in December 2020. With continuous growth in bank loans and
investments in 2021, the M2 growth rate sustained at a higher level, but broadly moderated from
June onwards. The M2 annual growth rate was 8.72% in 2021, higher than the upper boundary of the
reference range at 6.5%.

With regard to the monthly movements in 2021, for the first two months of the year, net foreign
capital inflows and faster growth in bank loans and investments, as well as stronger demand for
funds prior to the Lunar New Year holidays, brought the M2 growth rate up to 9.12% in February. It
slipped to 8.83% in April owing to net foreign capital outflows and slower growth in bank loans and
investments in March and April. Later, the M2 growth rate returned to an uptrend and hit a yearly
high of 9.23% in June, driven by stronger expansion in bank loans and investments.

From July onwards, owing to a higher base

effect, the M2 growth rate showed a broad Annual Growth Rate of M2
%
downtrend despite net foreign capital inflows 10

and an increase in bank loans and investments

8
sending the M2 growth rate slightly higher in 6.5 % 6.5 %

September. Afterwards, the M2 growth dropped 6

to a yearly low of 8.02% in December.

4

The annual growth rate of the monetary

2 2.5 % 2.5 %
aggregate M1B, measured on a daily average
0
basis, went up by 5.95 percentage points to 1 4 7 10 1 4 7 10 1 4 7 10
2019 2020 2021
16.29% in 2021. The rise in M1B growth was
Source: Financial Statistics Monthly (February 2022), CBC.
primarily owing to greater demand for funds
amid a steady recovery in the domestic
economy, a lower opportunity cost for the
$QQXDO*URZWK5DWHRI0%
public to hold demand deposits, and a 

booming stock market.

As for the monthly movements, the annual 

growth rate of M1B registered 17.81% in

January, and then rose to the yearly high of 

18.57% in February owing to higher demand


for funds prior to the Lunar New Year holidays
and an increase in currency issuance. Later,

           
bolstered by a gradual domestic economic   

recovery and a buoyant stock market, M1B 6RXUFH)LQDQFLDO6WDWLVWLFV0RQWKO\ )HEUXDU\ &%&

70
CBC Annual Report 2021

recorded month-on-month increases from March onwards; however, on account of a higher base
effect, the annual growth rate of M1B exhibited a steady downtrend and fell to an all-year low of
12.75% in December.

Continuing the Special Accommodation Facility to Support Bank Credit to SMEs

Back in April 2020, to help SMEs adversely impacted by the pandemic, the Bank launched the
Special Accommodation Facility to Support Bank Credit to SMEs ("the Facility"). With the domestic
COVID-19 flare-up in mid-2021, the Bank continued to conduct a rolling review on the Facility and
made relevant adjustments in order to enhance funding access for SMEs. Adjustments included
stretching the applicable duration of preferential interest rates on newly-approved cases, raising the
total amount of the Facility, extending the deadline for SME applications, and allowing increased
borrowing within the specified maximum.

As the pandemic situation was broadly stable at home, the need for such funding assistance
waned. The deadline for banks to accept new SME loan applications under the Facility remained
December 31, 2021, as scheduled. However, to continue offering assistance by easing corporate
funding burdens, the Bank extended the applicable duration of preferential interest rates on
approved SME loans to June 30, 2022. Under the Facility launched in April 2020 to the end of 2021,
financial institutions had approved more than 309 thousand applications with the disbursement
totaling NT$504.9 billion.

Adjusting the Selective Credit Control Measures

In view of the still fast increase in banks' real estate lending, the Bank adjusted the selective
credit control measures three times in the year 2021 to curb inordinate flows of credit resources
towards the property market and to further rein in financial institutions' credit risk associated with real
estate lending. These measures represented the policy efforts to facilitate effective allocation and
reasonable utilization of credit resources as outlined in the government's Healthy Real Estate Market
Plan so as to prevent bank credit from flowing towards property and land hoarding.

1. In 2021, the Bank further amended the Regulations Governing the Extension of Mortgage Loans by
Financial Institutions in March, September, and December to reinforce the selective credit control
measures. Major revisions were as follows:

(1) March 2021: The Bank lowered the LTV ratio caps on housing loans extended to corporate entities
and on the third (or more) housing loans and high-value housing loans by natural persons. The Bank
also introduced a new LTV ratio ceiling on mortgage loans for idle land in industrial districts.

(2) September 2021: The Bank removed the grace period for a second home loan taken out by a
natural person for housing located in the stipulated specific areas.9 The Bank lowered the LTV ratio
caps on land loans and on mortgage loans for idle land in industrial districts.

9 Specific areas included Taipei City, New Taipei City, Taoyuan City, Taichung City, Tainan City, Kaohsiung City, Hsinchu County, and Hsinchu City.

71
 III. Central Bank Operations

(3) December 2021: The Bank lowered the LTV ratio caps on high-value housing loans and on the third
(or more) housing loans by natural persons, on loans for unsold new housing units, and on mortgage
loans for idle land in industrial districts to 40%. The Bank also lowered the LTV ratio cap on land loans
to 50% and required that the construction should commence within the promised time frame as
formally undertaken by the loans' borrowers.

2. The Bank held meetings twice to improve the effectiveness of the selective credit control measures
and urged banks to implement credit risk-based interest rate pricing principles.

(1) The Bank held the meeting on "Strengthening the Effectiveness of the Implementation of the Bank's
Selective Credit Control Measures" in May with 36 domestic banks. Through the meeting, banks were
urged to comply with relevant laws and regulations as well as risk-based pricing principles when
extending mortgage loans and to avoid a price competition.

(2) The Bank held the meeting on "Strengthening the Effectiveness of the Implementation of the Bank's
Selective Credit Control Measures" again in October with 36 domestic banks and the National
Federation of Credit Co-operatives R.O.C. In this meeting, the Bank reiterated that banks should
comply with credit risk-based pricing principles and should fully explain the pricing strategies for
interest rates to borrowers so as to enable them to make proper financial planning decisions.

3. The Bank adopted the following supporting measures to improve the effectiveness of the
implementation of the selective credit control measures.

(1) Statistics of banks' newly-extended real estate loans were released regularly on the Bank's website.

(2) 55 on-site financial examinations were conducted in 2021 to ensure banks' compliance with relevant
laws and regulations.

(3) The Bank used moral suasion with banks, urging them to comply with relevant laws and regulations
and implement credit risk-based differential pricing principles.

(4) The Bank suggested the FSC to enhance control over financial institutions' real estate guarantee
business.

Facilitating SME Funding

To sufficiently meet the funding needs of SMEs, the FSC continued to encourage lending by
domestic banks to SMEs, while the Bank also urged commercial banks to increase lending to SMEs.

At the end of 2021, the outstanding loans extended to SMEs by domestic banks amounted to
NT$8,689 billion, increasing by NT$876 billion from the end of the previous year and far exceeding the
annual target of increased lending of NT$300 billion set by the competent authorities. Outstanding
SME loans recorded an annual growth rate of 11.22% at the end of 2021, lower than the previous
year owing to a higher base effect. Furthermore, the ratio of SME loans to loans extended to all
private enterprises rose slightly from 69.08% at the previous year end to 70.83% at the end of 2021.

72
CBC Annual Report 2021

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Accepting Redeposits from Financial Institutions

Accepting redeposits from Chunghwa Post, the Agricultural Bank of Taiwan, and commercial
banks is another instrument for the Bank to influence banks' reserve positions in order to promote
financial stability. At the end of 2021, the outstanding redeposits of Chunghwa Post stayed broadly
unchanged at NT$1,624 billion, while the outstanding redeposits of the Agricultural Bank of Taiwan
and of commercial banks were NT$165 billion and NT$354 billion, respectively.

Box Selective Credit Control Measures:

Implementation and Results

Pursuant to The Central Bank of the Republic of China (Taiwan) Act, the Bank is authorized by
law to adopt selective credit control measures in order to foster financial stability. Since the second
half of 2020, the domestic housing market had been gathering steam and a decline in mortgage
lending standards had also begun to show in some banks.

To promote financial stability and sound banking operations, to urge banks to carefully
consider mortgage loan purposes and borrower status as per the directive of "efficient allocation
and proper use of credit resources" under the government's Healthy Real Estate Market Plan,
and to curb bank credit resources from flooding the real estate market, the Bank implemented
selective credit controls on four occasions (December 2020, and March, September, and
December 2021) – by amending the Regulations Governing the Extension of Mortgage Loans by
Financial Institutions. The actions were aimed at strengthening bank management of credit risks
associated with real estate lending and preventing credit resources from being used for property
hoarding. They have since produced good results, with the LTV ratios significantly brought down for
the regulated loan types.

73
 III. Central Bank Operations

I. Implementation of the selective credit control measures

1. Introduction and amendments

(1) December 2020

The Bank noticed that there had been a disproportionate concentration on banks' real
estate lending – which could draw investment away from productive economic activities and
hamper sound allocation of credit resources – and an uptrend in housing loans and construction
loans. In this view, the Bank sought to rein in housing loans extended to natural persons buying
multiple homes and those to corporate entity homebuyers, to stop bank credit from being used
for hoarding undeveloped land, and to strengthen loan standards for unsold housing units. To
that end, the Bank introduced selective credit controls on housing loans to corporate entities,
on new housing loans to natural persons already with two or more outstanding housing loans, on
land loans, and on loans for unsold housing units, all four of which would also serve as uniform
regulations to facilitate compliance among financial institutions.

(2) March 2021

While real estate lending continued to exhibit fast growth, corporate entities also showed a
more pronounced tendency to buy multiple homes and to flip them for profit within a short time
span. Accordingly, the Bank amended the selective credit control measures, including lowering
the LTV ratio caps on housing loans taken out by corporate entities and on high-value housing
loans, and adjusting LTV ratio caps for natural person homeowners according to the number
of outstanding housing loans they already had. In addition, the Bank aimed to promote the
development of industrial land lots by introducing new restrictions on loans collateralized against
idle land in industrial districts.

(3) September 2021

To preempt an inordinate credit flow into the real estate sector for speculation and restrain
related credit risk, the Bank took the precaution of adjusting credit controls, including imposing
new restrictions on the second (or more) housing loans taken out by natural persons for homes in
the designated "specific areas,"1 to help contain overleverage and strengthen banks' credit risk
management. The Bank also lowered the LTV ratio ceiling on land loans to curb them from an
excessive surge. In addition, to urge land loan borrowers to begin construction promptly after land
acquisition, the Bank thus stipulated that the "specific time frame" condition for idle industrial land
mortgage loans to be exempt from the restrictions shall be one year.

(4) December 2021

In light of a still marked concentration of real estate lending in banks' loan positions, further
amendments were made to ensure bank credit resources were under robust management and

1 Including Taipei City, New Taipei City, Taoyuan City, Taichung City, Tainan City, Kaohsiung City, Hsinchu County, and Hsinchu City.

74
CBC Annual Report 2021

Key Points of the Adjustments of Selective Credit Control Measures

LTV ratio caps and others (date: mm/dd/yyyy)

Type of loans
12/08/2020 - 03/19/2021 - 09/24/2021 -
12/17/2021 -
03/18/2021 09/23/2021 12/16/2021

LTV cap: 60%;

First housing loan
No grace period LTV cap: 40%;
Corporate entity (unchanged) (unchanged)
Second (or more) LTV cap: 50%; No grace period
housing loan(s) No grace period

High-value housing
loan in addition to two LTV cap: 55%; LTV cap: 40%;
(unchanged)
(or less) outstanding No grace period No grace period
housing loans
LTV cap: 60%;
No grace period
High-value housing loan
in addition to three LTV cap: 40%;
(unchanged) (unchanged)
(or more) outstanding No grace period
housing loans
Natural person
Second housing loan
for a home in one of (nil) (nil) No grace period (unchanged)
the "specific areas"

LTV cap: 55%;

Third housing loan (unchanged)
LTV cap: 60%; No grace period LTV cap: 40%;
Fourth (or more) No grace period LTV cap: 50%; No grace period
(unchanged)
housing loan(s) No grace period

LTV cap: 50%,

with 10% withheld
LTV cap: 60%, for disbursement
with 10% withheld until construction
for disbursement commences;
LTV cap: 65%,
until construction
with 10% withheld
commences; Borrower required
Land loans for disbursement (unchanged)
to submit a
until construction
Borrower required to substantive
commences
submit a substantive development plan
development plan for and undertake that
the land purchased construction would
begin within a
specific time frame*

Loans for unsold housing units LTV cap: 50% (unchanged) (unchanged) LTV cap: 40%

LTV cap: 55%; LTV cap: 50%;

Exemption condition: Exemption condition:

(1) commencement (1) commencement
of construction, or of construction, or
TV cap: 40%;
(2) submission (2) submission
Internal rules of Exemption
Idle industrial district land mortgage loans of a substantive of a substantive
banks conditions
development plan development plan
unchanged
and an affidavit and an affidavit
stating that stating that
construction would construction would
take place within a take place within
specific time frame one year

Note: * On January 13, 2022, the Bank met with banks on the subject of "reinforcing management of risks associated with land loans," urging them to set up
internal rules to ensure that land loan borrowers begin construction on the collateralized land lots as per the loan terms. Particularly, regarding the
condition of "specific time frame," banks were asked to exercise prudence in assessing and verifying the actual time needed (up to a maximum
of 18 months) for borrowers before commencing construction. Banks should clearly state in the loan contracts that if borrowers fail to begin
construction within the agreed time frame, banks shall reclaim the loan amount disbursed in a gradual manner by a reasonable percentage and
raise the interest rates on the loans with annual increments.
Source: Department of Banking, CBC.

75
 III. Central Bank Operations

not used for speculative hoarding of homes and land lots. The key adjustments included lowering
the LTV ratio caps on high-value housing loans and the third (or more) housing loans for natural
persons, on land loans, on loans for unsold housing units, and on idle industrial district land.
Meanwhile, lending standards for land loans were tightened by requiring borrowers to commit in
writing to commencing construction within a specific time frame.

2. Related actions

To amplify the effects of the selective credit control measures, the Bank followed up with
related actions as described below.

(1) Compiling and disclosing relevant data: Statistical data on those types of real estate
lending subject to the Bank's credit controls are published on the Bank's website on a
regular basis.
(2) On-site financial examinations: Beginning from January 2021, the Bank also ran targeted
examinations to ensure the banking sector's compliance with the selective credit controls.
Within the year of 2021, a total of 55 such examinations were conducted.
(3) Meeting with financial institutions: The Bank held two meetings with financial institutions
in May and October 2021 on the subject of "enhancing the effectiveness of the selective
credit control measures," urging banks to ensure compliance, to offer reasonable pricing
based on assessments of credit risk and other factors, and to refrain from price wars.
The Bank also reminded borrowers to heed their own mortgage interest burdens and be
financially prepared for any future changes.
(4) Strengthening bank risk management in property guarantee business: Acting on the
recommendation of the Bank, the FSC adopted several measures to prompt banks to
enhance risk management related to real estate guarantee business. These measures
included a cap on the ratio of the guarantee balance of bills finance companies for
real estate firms and a requirement that banks shall incorporate real estate guarantee
business into the scope of their internal control and audit rules in accordance with the
relevant regulations stipulated by the Bank.

II. Implementation results of the Facility

1. LTV ratios brought down

Since the first rule tightening in December 2020, those types of loans under restriction have
been made by domestic banks in accordance with the relevant rules, and the average LTV ratios
have been significantly lower than before implementation.

76
CBC Annual Report 2021

LTV Ratios of Real Estate Loans Before and After Rule Tightening

(unit: %)

Before After Statutory cap Current cap

(average; (average; (Dec. 2021) (12/17/2021
Type of loans
mainly Jan.-Sept. Dec. 2021) onwards)
2020)

Corporate entity 63.97 39.84 40

Third housing loan 63.97 53.18 55

Fourth (and more) housing

63.97 47.84 50
loan(s)
Housing
40
loans Natural Two (or less)
person outstanding 71.00 50.68 55
housing loans
High-value
housing
Three (or more)
outstanding 71.00 39.28 40
housing loans

Loan application made during

63.60 65
12/08/2020-09/23/2021

Loan application made during

Land loans 69.19 58.05 60 50
09/24/2021-12/16/2021

Loan application made from

37.52 50
12/17/2021 onwards

Loan application made during

33.62 50
12/08/2020-12/16/2021
Loans for unsold
51.03
housing units
Loan application made from
28.59 40 40
12/17/2021 onwards

49.78
Idle industrial district land mortgage loans n.a. 50
(Oct. 2021)

Notes: 1. The "before" data are based on the information for the Jan.-Sept. 2020 period as reported by the 14 banks when they came to meet with the Bank
in November 2020, except for the "before" data on high-value housing loans taken out by natural persons, which were based on data reported by
banks before the Bank first imposed credit controls on this type of loan in June 2012.
2. The "after" data were compiled by the Bank based on the reports submitted by 39 domestic banks.
3. "n.a." means there was no statistical compilation.
Source: Department of Banking, CBC.

2. Banks' real estate lending risk management considered satisfactory

(1) Non-performing loan ratios comparatively low

As of the end of December 2021, the non-performing loan ratios for housing loans and
construction loans extended by domestic banks were 0.08% and 0.09%, respectively. With
both ratios lower than the overall non-performing loan ratio, which was 0.17%, domestic banks
continued to exhibit good asset quality.

77
 III. Central Bank Operations

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(2) Growth in real estate lending broadly slowed

At the end of December 2021, the annual growth rate of real estate lending by all banks
slowed to 10.41% from the 11.67% registered at the end of June 2021. Of the components, the
annual growth rate of construction loans dropped markedly to 14.11% from the 18.70% of end-
January 2021, while that of housing loans dropped to 9.46% from the 10.42% of end-June 2021.

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(3) Real estate loan concentration largely steady

From the beginning of 2021, the share of real estate lending in total lending by all banks
stayed largely steady. The share was 37.16% at the end of December 2021, still lower than the
historical high of 37.90% recorded at the end of October 2009.

78
CBC Annual Report 2021

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III. Conclusion: The Bank will run a rolling review and act as needed to sustain financial stability

A healthy real estate market requires coordinated efforts from all relevant government
agencies to address issues from the various aspects of demand, supply, and the system. Looking
ahead, the Bank will stay attentive to the developments in banks' real estate lending and in the
housing market, conduct a rolling review of the selective credit control measures, and act as
needed to promote sound banking operations and foster financial stability.

79
 III. Central Bank Operations

3. Foreign Exchange Management

Promoting the Sound Development of the Foreign Exchange Market

(1) Flexible foreign exchange rate management to maintain dynamic stability of the NT dollar

exchange rate

Taiwan is a small open economy with high dependence on foreign trade and susceptible to

potential impacts from sharp exchange rate fluctuations. Therefore, Taiwan adopts a managed float

exchange rate regime. Under this regime, the NT dollar exchange rate is in principle determined by

market forces. However, in the event of excessive exchange rate volatility, the Bank would conduct

appropriate smoothing operations to stave off adverse effects for economic and financial stability

and to facilitate an orderly foreign exchange market.

In recent years, massive and frequent movement of international short-term capital has become

the driving force of exchange rate changes. So as to mitigate excessive exchange rate volatility

and to improve market efficiency, the Bank has adopted "leaning against the wind" operations

to prevent erratic flows from disrupting the foreign exchange market. A stable foreign exchange

market is conducive to long-term economic stability and development.

In the first half of the year 2021, even though Taiwan was faced with a domestic flare-up of

COVID-19 infections, its own outstanding export performance and the US$1.9 trillion American

Rescue Plan drove the NT dollar to appreciate against the US dollar, and created wider fluctuations

of the NTD exchange rate. In the second half of the year, against the backdrop of the spread of

coronavirus variants all over the world, the Fed's monetary policy tightening to combat inflation,

an easing of Taiwan's pandemic outbreak, and continuous double-digit export growth, the NTD

exchange rate fluctuated in a relatively narrow range. To maintain dynamic stability of the NT dollar

exchange rate, the Bank continued to conduct two-way smoothing operations in the forex market.

For the year as a whole, net purchases by the Bank amounted to US$9.1 billion, and variability in

the NT dollar exchange vis-à-vis the US dollar was smaller than that of major currencies such as the

Singapore dollar, the Japanese yen, and the euro.

(2) Maintaining an orderly forex market and promoting sound market development

In 2021, the Bank carried on with a variety of policies to effectively manage the foreign

exchange market:

80
CBC Annual Report 2021

a. The Bank continued to implement the Real-Time Reporting System for Large-Amount Foreign Exchange
Transactions.

b. The Bank continued to strengthen management to ensure that forward transactions were based on
real transactions.

c. The Bank urged authorized banks to enhance their exchange rate risk management in order to
reduce market exposure of individual banks and to contain systemic risk.

d. The Bank continued to strengthen targeted examination on foreign exchange business to help ensure
a sound foreign exchange market.

Foreign Currency Call Loan and Swap Market Management

(1) To provide the financial system with sufficient foreign currency liquidity to meet funding needs,
including those for corporations to venture into overseas markets, the Bank appropriated seed
capital for the Taipei Foreign Currency Call Loan Market, including US$20 billion, €1 billion and
¥80 billion.

(2) Through foreign currency call loans and swaps conducted by authorized foreign exchange banks,
the Bank continued to support corporations and insurance companies by meeting the needs for
foreign currency liquidity and exchange rate hedging.

Foreign Exchange Reserve Management and Foreign Currency Liquidity of the Bank

The Bank manages its foreign exchange reserves based on the considerations of liquidity, safety,
and profitability. The Bank keeps a close watch on the global economic and financial situation
and adjusts the portfolio of foreign exchange reserves accordingly. Currently, financial assets
denominated in US dollars make up a larger share in Taiwan's foreign exchange reserves than the
COFER (Currency Composition of Official Foreign Exchange Reserves) average published by the
IMF. As of the end of 2021, Taiwan's total foreign exchange reserves stood at US$548.4 billion with an
increase of US$18.5 billion or 3.5% compared to the end of 2020, mainly attributable to returns from
foreign exchange reserve investments and smoothing operations. Combining the reserves held in
gold valued at US$5.6 billion, the Bank's reserves assets totaled US$554.0 billion at the end of the year.

Foreign exchange reserves are the Bank's foreign currency claims on nonresidents. On the other
hand, foreign currency claims on residents consist of US dollars held under swap agreements and foreign
currency deposits and loans to domestic banks, which amounted to US$91.9 billion, US$43.4 billion, and
US$7.2 billion, respectively, at the end of 2021.

In terms of foreign currency liquidity, the total amount, including foreign currency claims and

81
 III. Central Bank Operations

gold, reached US$700.5 billion at the end of 2021.

Capital Flow Management

In line with its efforts to promote financial liberalization and internationalization, the Bank's
foreign exchange management has mainly been focusing on maintaining the market mechanism,
and financial capital can, in principle, flow freely in and out of Taiwan. As of 2021, financial capital
flows not involving NT dollar conversion have been able to flow freely. Additionally, there are no
restrictions on financial flows involving NT dollar conversion for goods and service trade, nor for direct
and securities investments approved by the competent authorities. Regulation only exists for short-
term remittances. Annual remittances for an individual resident within US$5 million and for a juridical
person within US$50 million can be settled by banks directly, while annual remittances above the
aforementioned amounts require the approval of the Bank. Each transaction for a nonresident
within US$0.1 million can be settled by banks directly, whereas any transaction amount above that
threshold requires the approval of the Bank. Measures with regard to the management of capital
flows in 2021 included:

(1) As the Financial Supervisory Commission amended The Act Governing Electronic Payment Institutions,
which allows electronic payment institutions and foreign migrant worker remittance institutions to
undertake small amount remittance business, the Bank therefore amended both the Regulations
Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions and the
Directions for Banking Enterprises While Assisting Customers to Declare Foreign Exchange Receipts
and Disbursements or Transactions accordingly, effective July 1, 2021.

(2) Promoting the Internationalization of Taiwan's Capital Market

In 2021, cases of fund-raising by domestic and foreign institutions through securities issuance,
approved by or filed for record to the Bank, are shown in the following table.

Institution Fund-Raising Method Number Amount

IPO on TWSE & TPEx and registration on the

15 NTD 21.48 billion
Emerging Stock Board

NTD convertible bonds 9 NTD 10.37 billion

48 USD 38.28 billion

Foreign Companies 11 RMB 14.02 billion
Foreign currency-denominated bonds
9 AUD 1.14 billion
6 ZAR 4.45 billion

Overseas convertible bonds 1 USD 0.13 billion

Overseas depositary receipts 1 USD 0.1 billion

Domestic companies Overseas convertible bonds 5 USD 2.97 billion

(and domestic branches) Overseas depositary receipts 3 USD 0.52 billion
Note: TWSE stands for the Taiwan Stock Exchange; TPEx stands for the Taipei Exchange.
Source: Department of Foreign Exchange, CBC.

82
CBC Annual Report 2021

(3) Approving Residents' Investments in Foreign Securities

Institution Method/Instrument Amount

NTD 1,300.8 billion

63 domestic SITE funds (including 47 NTD-foreign multiple currency
(including 853.5 billion
Securities investment trust SITE funds)
companies (SITEs) multiple currency funds)

4 SITE private funds NTD 4.8 billion

Non-discretionary money trusts managed by financial institutions USD 0.6 billion

Life insurance companies
Investment for their own accounts USD 0.02 billion

Five major government

pension funds and Investment for their own accounts USD 7.57 billion
employment insurance funds

Source: Department of Foreign Exchange, CBC.

Management of Foreign Exchange Business of Financial Institutions

(1) Authorized foreign exchange banks

Pursuant to The Central Bank of the Republic of China (Taiwan) Act and the Foreign Exchange
Regulation Act, the Bank reviews, authorizes and supervises banks to conduct foreign exchange
business accordingly. In 2021, the Bank continued to approve bank branches as authorized foreign
exchange banks and loosened restrictions on foreign exchange derivative product business in
order to facilitate authorized foreign exchange banks' competitiveness and service quality. Major
developments in 2021 were as follows.

a. At the end of 2021, there were 3,465 authorized foreign exchange banks in total, which included
37 head offices and 3,390 branches of domestic banks, 35 branches of foreign banks, three
branches of Mainland Chinese banks, as well as 4,647 authorized money exchangers, post offices,
and financial institutions authorized to engage in basic foreign exchange business.

b. The Bank amended the Regulations Governing Foreign Exchange Business of Banking Enterprises on
January 28, 2021 to simplify procedures and qualifications for commercial banks to apply to become
authorized foreign exchange banks. Restrictions were also relaxed for authorized banks to issue foreign
currency bank debentures linked to derivatives or structured notes.

c. The Bank amended the Directions Governing Authorized Banks for Operating Foreign Exchange
Businesses Through Electronic or Communications Equipment on December 30, 2021. Authorized
banks can undertake customers' foreign exchange business through electronic or communications
equipment without making a prior application as long as such business does not involve NT dollar
conversion.

83
 III. Central Bank Operations

(2) Insurance Companies

As of the end of 2021, the numbers of insurance companies allowed to engage in traditional
and in investment-linked foreign currency insurance business were both 21. The foreign currency
premium revenue increased by US$3.55 billion, or 10.3%, from the previous year to US$37.96 billion in
2021.

(3) Securities Firms and Bills Finance Companies

a. The Bank amended the regulations on limits on foreign currency bills and bonds as well as
foreign currency borrowings and loans by bills finance companies and broadened the scope of
counterparties on October 20, 2021.

b. Approved cases for securities firms and bills finance companies to conduct foreign exchange business
in 2021 are listed in the following table.

Institutions Foreign Exchange Business Number

Underwriting of international bonds denominated in foreign currency 1

Proprietary foreign securities trad-ing neither belonging to investment with their own
3
funds nor for hedging needs

Spot exchange transactions be-tween NT dollar and foreign cur-rencies 1

Foreign currency spot exchange transactions 1

Securities Firms
Trading and exchanging beneficial certificates of funds 1

Accepting orders to trade onshore and offshore funds 1

Structured notes linked to foreign financial products 3

Issuance of exchange traded notes tracking underlying foreign indices 1

Bills Finance companies Auditing, underwriting, brokering, proprietary trading business of foreign currency bills 1
Source: Department of Foreign Exchange, CBC.

(4) Investment Trust/Consulting Firms and Futures Firms

The approved cases granted by the Bank for investment trust and investment consulting firms
and futures firms (concurrently operating as a leverage transaction merchant) to conduct foreign
exchange business as of 2021 are shown in the following table.

Institutions Foreign Exchange Business Number

Serving as mandated institutions of private offshore funds 4
Investment trust and investment
consulting firms Conducting public offer or private placement of foreign currency-denominated
1
funds

Futures firms (concurrently Foreign currency margin trading 1

operating as a leverage Contracts for difference linked to silver, foreign equities or ETFs, or foreign stock
transaction merchant) 3
market indices
Source: Department of Foreign Exchange, CBC.

84
CBC Annual Report 2021

(5) Foreign Exchange Brokers

To diversify equity ownership and to improve management on foreign exchange brokers, the
Bank amended the Regulations Governing Foreign Exchange Brokers on September 14, 2021. The
amendments included broadening the scope of related parties, applying the investment cap to the
combined amount of investments by stipulating different investment caps according to the type of
financial institution to which their related parties belong and adding in required qualifications for
promoters, directors and supervisors, and responsible persons of foreign exchange brokers.

Foreign Currency Clearing Platform

(1) Taiwan's foreign currency clearing platform was consigned by the Bank and established by the
Financial Information Service Co. The platform offers services for domestic and cross-border (including
cross-strait) remittances of the Chinese renminbi and the Japanese yen, and domestic remittances
of the US dollar, the euro, and the Australian dollar. The platform adopts a payment-versus-payment
(PVP) mechanism among banks, a liquidity-saving mechanism for foreign currency remittances, and
a delivery-versus-payment (DVP) mechanism for foreign currency bonds and bills. It has continued to
function smoothly since its inauguration in 2013.

(2) Domestic Development of Foreign Currency Settlement Business in 2021

Settlements in 2021
Domestic Participating
Currency
Units
Number of Transactions Amount

US dollar 69 1,317,040 USD 1,783.1 billion

Renminbi 60 319,596 RMB 606.6 billion

Yen 39 31,636 JPY 1,131.9 billion

Euro 39 18,034 EUR 6.2 billion

Australian dollar 30 27,175 AUD 1.3 billion

Source: Department of Foreign Exchange, CBC.

Offshore Banking

(1) The Bank collaborated with the Financial Supervisory Commission in its amendment to the Regulations
Governing Domestic Juridical Persons Opening Accounts for the Purpose of Handling Loan-related
Receipts and Disbursements in Offshore Banking Units, including relaxing the restriction on transaction
counterparties of the loan-related accounts to meet the practical need for credit business. The
amended draft entered the preview process on December 8, 2021.

85
 III. Central Bank Operations

(2) Financial Status

a. Offshore Banking Units (OBUs)

At the end of 2021, the number of OBUs came to 59, and total OBU assets increased by
US$10.46 billion, or 4.4%, over the previous year to US$249.92 billion. The net income after tax of all
OBUs amounted to US$3.22 billion, decreasing by US$0.31 billion, or 8.8%, from a year before.

b. Offshore Securities Units (OSUs)

At the end of 2021, the number of OSUs stood at 19, and total OSU assets reached
US$4.54 billion, a decrease of US$1.27 billion or 21.9%. The net income after tax of the business
also decreased by US$130.9 million, or 71.2%, to US$53.0 million for 2021.

c. Offshore Insurance Units (OIUs)

As of the end of 2021, the number of OIUs was 20, with a total amount of assets of US$1 billion,
which was US$0.01 billion or 1.0% more than the previous year end. The net income after tax of all
OIUs decreased to US$18.3 million, a decline of US$20.7 million or 862.5% from 2021.

86
CBC Annual Report 2021

4. Payment and Settlement Systems

The Bank plays a crucial role in the functioning of Taiwan's payment and settlement systems,

and operates the CBC Interbank Funds Transfer System (CIFS) and the Central Government Securities

Settlement System (CGSS).

The CIFS serves as the hub of Taiwan's payment and settlement systems, linking the interbank

clearing systems operated by the FISC, the Taiwan Clearing House (TCH), the National Credit

Card Center of R.O.C. (NCCC), the Taiwan Depository and Clearing Corporation (TDCC), the

TPEx, and the TWSE, as well as the CGSS, together to construct a comprehensive system.

CIFS Settlement Services

Call loans
Funds ATM Check
transfers withdrawals clearing
Transaction Open market Government Credit
Securities Bonds2 Bills
Category operations bonds1 NTD & foreign
Bill/tax
cards
ACH
currency transactions
payments
Other funding remittances
activities

CBC TPEx TCH

FISC
CGSS EBTS CCS

Clearing
TWSE TDCC NCCC
FCCP3 FIS
SBECS BCS CCCS

Settlement CIFS

Notes: 1. Including DVP settlements for interbank transactions of central government bonds and treasury bills.
2. Including netting settlements for outright trades of government bonds, corporate bonds, and bank debentures.
3. The CIFS is only responsible for settlements involving NT dollars, while settlements involving foreign currencies are performed by
designated commercial banks.
Source: Department of Banking, CBC.

87
 III. Central Bank Operations

In addition, the Bank monitors major payment systems based on the Principles for Financial

Market Infrastructures released by the Bank for International Settlements (BIS) to ensure sound

operation of these systems and to promote stability of the financial system.

Operation of Payment and Settlement Systems

(1) Funds Transfers via the CIFS

As a large-value electronic funds transfer system, the CIFS not only deals with interbank funding,

open market operations, and funds settlements in financial markets, but also provides interbank final

settlement services for each clearing institution.

In 2021, two more banks joined the CIFS. At 7UDQVDFWLRQ9DOXHDQG9ROXPH

the end of 2021, there were 84 participants of RIWKH&,)6
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the CIFS, including 69 banks, eight bills finance  

companies, Chunghwa Post, and six clearing  

institutions, namely the FISC, the TCH, the  

TDCC, the TWSE, the TPEx, and the NCCC. In  

the year 2021, the number of transactions via  

the CIFS was 704,219, and the amount of funds

 

transferred totaled NT$533 trillion. Meanwhile,

 
         
the daily average number of transactions via
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the CIFS was 2,840, decreasing by 1.97% over

the previous year, whereas the daily average

amount of funds transferred was NT$2,147 billion, increasing by 6.35% from a year before.10

(2) Transactions via the CGSS

Established in September 1997, the CGSS is a system for issuance, transfer, redemption, and
interest payment of book-entry central government securities. Since its inception, central government
bonds have been issued in book-entry form. Treasury bills were included in this system in October
2001 and have since been issued in book-entry form.

Since April 2008, when the CGSS linked up with the CIFS, fund settlements, principal
redemptions, and interest payments have been handled through the CIFS using a delivery-
versus-payment (DVP) mode. The DVP mode, promoted by the BIS, is an arrangement in a
securities settlement system to ensure that securities delivery occurs at the same time as the

10 The average transaction volume decreased primarily owing to declines in primary and secondary market transactions in central government bonds and
interbank foreign exchange market transactions. On the other hand, the average transaction value increased mainly because of rises in transactions in
certificates of deposit and interbank call loans.

88
CBC Annual Report 2021

funds transfer, effectively eliminating potential principal risk during the transaction process.

As of the end of 2021, there were

19 clearing banks with 1,678 branches 7UDQVDFWLRQ9DOXHDQG9ROXPH
that handled the registration of central RIWKH&*66
9DOXH5HJLVWHUHG /+6 9ROXPH5HJLVWHUHG 5+6
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system processed 124,202 transfers with a
total amount of NT$14.9 trillion. The declines 

in transaction value and volume of the CGSS

in 2021 were mainly caused by the impact
of the domestic COVID-19 flare-up as well 

as market expectations of the Fed tapering
faster and raising rates at the end of the year,  
         
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decreasing bond trading incentives.

Oversight of Payment and Settlement Systems

To ensure sound operation of domestic payment and settlement systems and maintain their
safety and efficiency, the Bank conducted the following oversight activities in 2021:

(1) Making Amendments to Relevant Regulations

In February 2021, the Bank amended the Directions for the Central Bank of the Republic of China

(Taiwan) to Govern Electronic Interbank Funds Transfer and Settlement after thoroughly examining

the relevant directions on payment and settlement risk management.

(2) Monitoring the Operation of the Large-Value Payment Systems

The Bank continued to monitor the operation of the large-value payment systems in 2021. During
the year, 22 applications for the CIFS operation time extensions were filed by participating institutions
because of system malfunctions or other contingencies. The Bank required these institutions to
improve the time extension issue.

(3) Requiring Payment Institutions to Submit Information on Electronic Payment Business

Payment system operators and electronic payment service providers were required by the Bank
to submit information about their operations and activities with regard to electronic payments on a
regular basis. Furthermore, the Bank kept close watch on the development of financial technology
(fintech) and innovations in the payment industry to assist in providing sound retail payment
infrastructure.

89
 III. Central Bank Operations

(4) Supervising Contingency Drills Performed by Clearing Institutions

To ensure business continuity of payment and settlement systems, the Bank supervised

clearing institutions conducting testing of business continuity plans and remote backup

operations in case of emergency. In December 2021, the Bank, together with participants of

the CIFS, performed system-wide testing of the operating procedures to ensure that the backup

systems would operate smoothly when an emergency occurs and relevant personnel would be

familiar with contingency procedures in response to disruptions to the system network.

(5) Performing Backup Drills with Clearing Banks

Since 2019, the Bank has supervised all clearing banks per for ming backup drills in the

event of malfunction or line interruption of a CGSS participant's mainframe system annually. In

November 2021, this drill was conducted successfully with 19 clearing banks.

(6) Organizing Conferences to Enhance Payment System Operation

The Bank invites the FSC and clearing institutions to jointly hold two conferences on

"Promoting Sound Operation of the Payment Systems" every year. However, owing to the

COVID-19 pandemic, the conference held for securities clearing institutions including the

TDCC, the TPEx, and the TWSE was suspended and replaced with report submission by the

aforesaid institutions. The November meeting was held as scheduled and attended by payment

clearing institutions including the FISC, the TCH, and the NCCC. The Bank urged clearing

institutions to strengthen business continuity planning, enhance backup drills, and allocate

appropriate operational staff to maintain business continuity in response to the pandemic or

other emergencies.

(7) Strengthening Liquidity Management of the Interbank Funds Transfer Guarantee Special Account

under the CIFS

In light of significant growth in interbank retail payment transactions and the

commencement of internet-only banks, the Bank raised the ceiling on the amount of financial

institutions' end-of-day balance in the Interbank Funds Transfer Guarantee Special Account

to be counted as part of the required reserves from 8% to 16%, effective from February 2021.

In 2021, the daily average balance of the Special Account as guarantee funds to ensure the

smooth functioning of the interbank retail payment system on a 24/7 basis was approximately

NT$167 billion.

90
CBC Annual Report 2021

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Ensuring Business Continuity of Payment and Settlement Services During the Pandemic
Period

To ensure business continuity of payment and settlement systems during the pandemic, CIFS

participating institutions were requested to continue complying with the guidance promulgated

by the Bank. For example, participating institutions should deploy appropriate operational staff

depending on the pandemic situation and take the following measures when necessary, such as

implementing remote backup systems and operational measures, entrusting other participating

institutions to assist with transfer or payment of funds, and transferring funds using physical checks.

Furthermore, in May 2021, the Bank reiterated the pandemic precautions for the CGSS

operations which were stipulated in 2020 as guidance to ensure that all CGSS participants maintain

business continuity by means of off-site working and other measures. As a whole, the domestic

payment and settlement systems operated smoothly throughout the year without being disrupted by

the pandemic.

Continuing to Urge the FISC to Assist in Providing Sound Mobile Payment Infrastructure
for Financial Institutions

To enhance information transmission and to facilitate transfer of funds between electronic

payment institutions and between electronic payment institutions and financial institutions, the Bank

required the FISC to construct an "inter-institutional electronic payment institutions platform," which

was launched in October 2021, to provide the funds transfer service. The platform would also be

expected to offer tax and bill payment services in 2022.

In addition, to improve the convenience of interbank funds transfer, the FISC launched the

91
 III. Central Bank Operations

"mobile number funds transfer" service in September 2020 to allow users to transfer funds by linking

one mobile phone number to one bank account as a payee account. Later, the service was

expanded for users to designate one mobile number to multiple bank accounts in September 2021.

As of the end of 2021, 29 financial institutions provided the service of mobile number funds transfer.

Among them, eight financial institutions offered users the option to link multiple bank account with

one mobile number.

Extending the PoC Project to a General Purpose CBDC

The Bank completed the first phase of the CBDC research, which was a technical study on the

feasibility of a wholesale CBDC in June 2020. The results showed the limitations of applying distributed

ledger technology (DLT) to CBDCs because the DLT's performance could not meet the needs for

real-time, high-frequency, and large-scale payment transactions. The ongoing second phase is a

proof-of-concept (PoC) study on a general purpose CBDC, which already entered the technical

experimentation stage. A prototype for a CBDC platform was established to simulate the CBDC

in retail payment use cases, and the study is expected to be completed in September 2022. The

experiment results will be disclosed at an appropriate time and serve as a basis for public discussion,

which the Bank plans to use to broadly solicit stakeholders' opinions to assess the possibility of CBDC

issuance.

92
CBC Annual Report 2021

5. Currency Issuance

As the sole agency with the authority to issue banknotes and coins, the Bank continued in 2021
to ensure a stable currency supply to meet public demand, which is subject to domestic economic
conditions, seasonal factors, and the development of noncash payment instruments. The Bank also
issued commemorative coin sets featuring the Chinese zodiac of the year and national parks of Taiwan.

Furthermore, to mitigate the impact of the coronavirus pandemic, the Bank was instructed to
design and print the Quintuple Stimulus Vouchers as part of government efforts to stimulate and revive
the economy. Meanwhile, the Bank continued to promote public awareness of counterfeit deterrence
and encourage the use of circulating currency through various channels. The Bank also developed
easy-to-use assistive devices to aid the visually impaired in identifying NT dollar banknotes.

Currency Issuance Increased to Meet Currency Demand

In 2021, the Bank provided an adequate

Currency Issued
amount of currency in response to currency
NT$billion
demand. The currency issued peaked at 3,000

NT$3,065.0 billion on February 9, the last business 2,900

2,800
day before the Lunar New Year holidays,
2,700
reflecting a temporary seasonal surge in cash
2,600
demand. At the year end, the outstanding
2,500
amount of currency issued was NT$2,948.4 billion,
2,400
rising by NT$343.9 billion or 13.21% over the 2,300

previous year end. 2,200

1 4 7 10 1 4 7 10 1 4 7 10
2019 2020 2021
By denomination, the composition of Source: CBC.
NT dollar banknotes in circulation at the end

Composition of NT Dollar Banknotes Issued

( Year-End Figures )
2021 2020
NT$100 NT$100
NT$500 4.57 % Others NT$500 4.83 % Others
0.35 % NT$2,000 0.40 % NT$2,000
3.55 % 3.71 %
3.46 % 3.92 %

NT$1,000 NT$1,000
88.07 % 87.14 %
Source: CBC.

93
 III. Central Bank Operations

of 2021 was similar to the end of 2020. The majority of circulating banknotes went for the NT$1,000
note with a share of 88.07%, followed by the NT$100 and NT$500 notes with shares of 4.57% and
3.55%, respectively.

Currency in Circulation to GDP Rose Steadily The Ratio of Currency Held

by the Public to GDP
%
As domestic interest rates stayed at 12

relatively low levels and cash was still

11
frequently used for small-value transactions,
10
the public's demand for currency remained

high. The ratio of currency in circulation to 9

GDP has continued to rise steadily since 2012

8

and reached 11.68% in 2021, 0.24 percentage

7
points higher than the 11.44% of the previous 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

year. Sources: 1. CBC.

2. DGBAS, Executive Yuan.

Two Commemorative Coin Sets Were Issued

The Bank may also issue gold and silver coins and commemorative coins from time to

time, such as for important ceremonies, national holidays, major international events, or other

significant national events. During 2021, the Bank issued a casting set of coins for the Chinese

Zodiac Year of the Ox and the tenth coin set of the National Parks of Taiwan series – Shoushan

National Nature Park.

Commemorative Coin Set National Parks of Taiwan

for the Chinese Zodiac Year Series X - Shoushan
of the Ox National Nature Park

Source: CBC.

94
CBC Annual Report 2021

The Bank was Instructed to Print Quintuple Stimulus Vouchers to Assist Reviving Consumption

During 2021, in order to assist domestically-oriented service industries to weather a midyear

domestic COVID-19 flare-up and encourage consumption, the government rolled out the

Quintuple Stimulus Voucher program, 11 effective from October 8. The Central Engraving and

Printing Plant, a subsidiary of the Bank, conducted the design of the vouchers with anti-

counterfeiting techniques in August, and later completed the production of 19.5 million sets of

paper vouchers (each set containing three NT$1,000 vouchers, two NT$500 vouchers and five

NT$200 vouchers) on October 13.

Proof Copies of Quintuple Stimulus Vouchers

Source: CBC.

The Bank Continued to Encourage the Use of Circulating Currency and Raise Public
Awareness of Counterfeit Money

In order to deter and prevent counterfeiting, reduce currency issuing costs, and protect the

environment by maximizing existing resources, the Bank launched several advertising campaigns

during 2021 to enhance public understanding on the security features of NT dollar notes and

coins and to promote the use of circulating currency.

11 Under the voucher program, any citizen born before April 30, 2022, foreign spouse, permanent foreign resident, or accredited diplomat can register to receive
the Quintuple Stimulus Vouchers in digital or paper form. These vouchers are worth NT$5,000 and will be free of charge. Consumers could use the stimulus
vouchers for dining, travel, leisure, or shopping expenses from October 8, 2021 to April 30, 2022.

95
 III. Central Bank Operations

While striving to improve the cleanliness of currency by inspecting returned banknotes and

destroying damaged ones, the Bank also continued to urge the public to help maintain the

cleanliness of circulating notes and coins.

Educational materials for these campaigns were provided through multiple channels. For

example, relevant videos were broadcasted on media such as the Bank's website, the Virtual

Money Museum, YouTube, and the Bank's official mobile app. Information was also posted on the

Bank's Facebook fan page and displayed on public transportation. Leaflets were distributed to

the public and relevant institutions.

The Bank Was Devoted to Providing the Visually Impaired with Barrier-free Access to Currency

Since 2020, the Bank has carried out a program to promote the "visually impaired-friendly NT

dollar banknote identification service." The Bank made multifaceted efforts to improve the ability

of visually impaired people to recognize banknotes by producing audio materials and entrusting

local visually impaired support groups to assist in education, and by developing easy-to-use

assistive devices such as the NT dollar banknote gauge card, which have been distributed for

free to the visually impaired.

Raised-Dot Tactile Feature of NTD Banknotes (Left) and NTD Banknote Gauge
Card (Right) for the Visually Impaired

Source: CBC.

96
CBC Annual Report 2021

The Virtual Money Museum Website Was Upgraded

The Bank's Virtual Money Museum has been running smoothly since it came on line in June 2013.

In response to increased use of mobile technologies and the needs of various platforms and devices,

the Bank launched the upgraded version of the Virtual Money Museum website in August 2020. For

instance, the Virtual Exhibition Hall of the above website allowed viewers to browse banknotes from

around the world classified in various themes.

Annual Exhibition 2021 Titled "Human Rights Fighters" on the Virtual Money Museum Website

Source: CBC.

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 III. Central Bank Operations

6. Fiscal Agency Functions

The Bank, as the fiscal agent of the government, offers services for the national treasury, such

as handling the treasury deposit account (TDA), managing central government agency deposit

accounts, and undertaking the issuance, transfer and registration, redemption, and interest payment

of central government bonds and treasury bills.

Managing the Treasury Deposit Account

The Bank manages the TDA on behalf of the Ministry of Finance, processing receipts

and disbursements of the central government. In order to provide convenient services for

government agencies and the general public, the Bank delegates the handling of treasury

business to 14 financial institutions and their 367 branches, including three overseas branches

located in New York, Los Angeles, and Paris. In addition, there are another 4,746 national tax

collection agencies set in financial institutions. In 2021, the Bank received a total of NT$4,197.9 billion

in treasury deposits, an increase of NT$264.7 billion or 6.73% over the previous year. Payments made

on behalf of the national treasury were NT$4,183.5 billion, increasing by NT$245.7 billion or 6.24% from

2020. At the end of 2021, the TDA balance was NT$67.7 billion, an increase of NT$14.3 billion or 26.78%

from the end of 2020.

Handling Central Government Agency Deposits

Central government agencies are required to make their deposits with the Bank or other

delegated banks. At the end of 2021, the balance of central government agencies' deposits

with the Bank amounted to NT$184.2 billion, a slight increase of NT$0.8 billion or 0.44% over 2020.

Deposits with other delegated banks were NT$657.5 billion at the end of 2021, increasing by

NT$38.9 billion or 6.29%.

Managing Central Government Bonds

As a fiscal agent, the Bank provides services related to the issuance, transfer and registration,
redemption, and interest payment of central government bonds. The Bank also conducts the

auctions of central government bonds. There are 57 domestic dealers qualified to directly participate

in the auctions, including 23 banks, 19 securities companies, eight bills finance companies, six

insurance companies, and Chunghwa Post.

In 2021, the Bank conducted 20 issues of central government bonds in book-entry form worth

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CBC Annual Report 2021

NT$617.0 billion. Of this amount, 10-year bonds accounted for the lion's share of 34.04%, with NT$210.0

billion, followed by 20-year bonds, representing a share of 21.07% with an amount of NT$130.0 billion.

In addition, the Bank paid NT$467.0 billion in principal and NT$88.1 billion in interest for central

government bonds. At the end of 2021, the outstanding amount of central government bonds was

NT$5,674.5 billion, an increase of NT$150.0 billion or 2.72% from the previous year end.

Managing Treasury Bills

The Bank also handles the auctions of treasury bills. Currently, direct bidders include banks,

insurance companies, securities companies, bills finance companies, and Chunghwa Post.

In 2021, the Bank conducted 10 issues of book-entry treasury bills with a total amount of

NT$320.0 billion. The majority of the issuance went for 91-day bills with NT$165.0 billion, or a share
of 51.56%. At the end of 2021, the outstanding amount of treasury bills was NT$115.0 billion, a

decrease of NT$10.0 billion or 8.00% from the end of 2020.

99
 III. Central Bank Operations

7. Financial Inspection

Pursuant to the objectives and duties stipulated in The Central Bank of the Republic of China
(Taiwan) Act, the Bank conducts targeted examinations to ensure that monetary, credit, and
foreign exchange policies are implemented effectively. The Bank has also established a report
auditing system and a financial stability assessment framework to systematically monitor and assess
possible sources of potential risks. The Bank adopts appropriate policies accordingly, in a timely
manner to achieve the operational goal of financial stability. The following are the main tasks
conducted in 2021.

On-Site Examination

Targeted examinations in 2021 were conducted on real estate mortgage loans and related fund
flows, loan pricing policies, foreign exchange inward and outward remittances, customers' foreign
exchange settlement of loans from abroad, derivatives transactions involving NTD exchange rates,
deficiency corrections for forward exchange transactions, and counterfeit money processing of NTD
and foreign currencies, etc.

Follow-up on Examination Findings

To ensure the effectiveness of the Bank's policies, the Bank continued to track whether the
financial institutions under inspection had improved their operations based on the findings from
the Bank's targeted examinations as well as the results of the Financial Supervisory Commission's
financial examinations related to the Bank's operations or regulations. A particular focus in 2021 was
on violations of the Regulations Governing the Extension of Mortgage Loans by Financial Institutions,
followed up by administrative actions by the Bank.

Strengthening Off-Site Monitoring

In view of changes in financial conditions and amendments to financial regulations, the Bank
constantly reviews and revises all relevant reporting forms and contents of statistical data submitted
by financial institutions. Developments related to off-site monitoring in 2021 included the following:

(1) To strengthen its effectiveness of off-site monitoring of domestic banks, the analytical items and
principles of the report auditing system CARSEL were reviewed and modified.

(2) Relevant reports and their analytical categories of financial institutions were modified in accordance
with the amendments to "the Methods for Calculating Bank's Regulatory Capital and Risk-Weighted
Assets" and the Regulations Governing Foreign Bank Branches and Representative Offices, as well

100
CBC Annual Report 2021

as the announcements and modifications of related regulations and administrative orders including
the Regulations Governing Domestic Juridical Persons Opening Accounts for the Purpose of Handling
Loan-Related Receipts and Disbursements in Offshore Banking Units.

(3) In accordance with the revisions to the Country Exposure Report and its related analytical programs,
banks were required to submit the completed Reports through the Bank's Financial Information
Online Reporting System.

Improving Information Transparency of Financial Institution Operations

The Bank regularly compiles and publishes financial institution statistics, such as Condition and
Performance of Domestic Banks (Quarterly) and Business Overview of Financial Institutions (Yearly).
All related information is disclosed on the Bank's website and available for inquiry and download,
with the aim of strengthening information transparency of financial institutions' operations and to
reinforce market discipline.

Financial Stability Assessment

The Bank regularly conducts analysis on commercial banks' business operations and their risk
exposure so as to identify potential risks to the stability of the overall financial system. It also compiles
financial soundness indicators and publishes the Financial Stability Report to keep the public
updated on the state of the domestic financial system and sources of potential risks and to aid
cross-border communication and information sharing.

To enhance analytical effectiveness regarding financial stability, the Bank continued to improve
the graphical user interface (GUI) of credit and market risk models and estimated domestic banks'
value at risk (VaR) and unexpected losses from related risks, so as to capture the vulnerability of the
banking system and to take preemptive measures.

In addition, climate change-related issues, which have increasingly drawn supervisory authorities'
attention, have created new challenges and risks to central banks' conduct of monetary policy
and the statutory mandate to maintain financial stability. In this view, the Bank devised strategies
for addressing climate change issues, aiming to mitigate the impacts of related risks on domestic
economic and financial systems so as to maintain financial stability and foster sustainable
development of Taiwan's economy.

International Cooperation in Financial Supervision

In 2021, the Bank continued to actively engage in international cooperation related to financial
supervision, such as attending the 12th SEACEN Meeting of Deputy Governors in Charge of Financial

101
 III. Central Bank Operations

Stability and Banking Supervision, the 23rd SEACEN-FSI Conference of the Directors of Supervision of
Asia-Pacific Economies, and the 34 th Meeting of Directors of Supervision of SEACEN Members (all
held in virtual format). The Bank's delegates also attended international teleconferences, online
courses, and webinars on financial supervision and financial stability.

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CBC Annual Report 2021

8. Participation in International Activities

The Bank's endeavors to take part in international activities continued in 2021. As a member,
the Bank hosts conferences, provides training courses, and attends numerous forums, including the
annual meetings organized by the Asian Development Bank (ADB), the Central American Bank for
Economic Integration (CABEI), and the South East Asian Central Banks (SEACEN) group. Furthermore,
the Bank strengthens its ties with other central banks and related institutions to exchange views and
share policy experience on current financial and economic issues.

In 2021, the Bank attended the 57th SEACEN Governor's Conference held virtually on December
6. At this conference, the Bank exchanged views with other member banks on the deep economic
and financial impact of the COVID-19 pandemic on the global economy, and reaffirmed its
commitment to help mitigate the pandemic's impact through policy responses on macroeconomic
and financial fronts.

The Bank also attended the 12 th SEACEN Online High-Level Seminar and Meeting of Deputy
Governors of Financial Stability and Supervision during August 18 to 19.

In the meantime, the Bank participated in the meetings held virtually by other international
organizations, such as the CABEI's 61st Ordinary Meeting of the Board of Governors on September 3,
and the BIS' 91st Annual General Meeting on June 28 and 29.

103
III. Central Bank Operations

104
CBC Annual Report 2021

Chronology of Events of
the CBC in 2021

105
 Chronology of Events of the CBC in 2021

Chronology of Events of the Central Bank of

the Republic of China (Taiwan)1 in 2021
Date Event

Jan. 21 The CBC issued a commemorative coin set for the Xin Chou Year of the Ox
(2021).

25 The CBC raised the ceiling ratio for the daily balance of the "interbank funds
transfer guarantee special accounts" of financial institutions to be counted
as part of the required reserves from 8% to 16%, effective from February 4,
2021.

28 The CBC amended the Regulations Governing Foreign Exchange Business of

Banking Enterprises to simplify procedures and qualifications for commercial
banks to apply to become authorized foreign exchange banks and to relax
relevant restrictions so as to allow authorized banks to issue foreign currency
bank debentures linked to derivatives or structured notes, effective from
January 30, 2021.

Feb. 5 The CBC imposed punitive sanctions on four branches or subsidiaries of

foreign banks for violating the CBC's regulations when conducting NTD
forward exchange transactions, effective from February 8, 2021.

18 The CBC increased the monthly bidding amount for 2-year certificates of
deposit from NT$40 billion to NT$60 billion from February 2021 onwards.

Mar. 18 The CBC's Board decided to adopt the following measures:

1. Keeping the discount rate, the rate on refinancing of secured loans, and
the rate on temporary accommodations unchanged at 1.125%, 1.5%, and
3.375%, respectively.
2. Amending the Regulations Governing the Extension of Mortgage Loans by
Financial Institutions, including lowering the LTV ratio caps on housing loans
extended to corporate entities and on high-value housing loans and the
third (or more) housing loans taken out by natural persons, and introducing
a new LTV ratio ceiling on mortgage loans for idle land in industrial districts,
effective from March 19, 2021.

1 Herein referred to as the CBC.

106
CBC Annual Report 2021

Date Event

Mar. 19 The CBC amended the "Regulations for the Central Bank of the Republic
of China (Taiwan)'s Handling of the Special Accommodation Facility to
Support Bank Credit to SMEs Affected by the Coronavirus Disease (COVID-19)"
(hereinafter the Special Facility Regulations) to extend the expiry date of the
facility to December 31, 2021.

Apr. 15 The CBC increased the monthly bidding amount for 2-year certificates of
deposit from NT$60 billion to NT$80 billion from April 2021 onwards.

27 The CBC reappointed Mega International Commercial Bank as the clearing

bank for foreign currencies other than the US dollar, the RMB, the Japanese
yen, and the euro settled on the foreign currency clearing platform.

May 7 The CBC met with 36 domestic banks to urge them to reinforce risk
management associated with real estate loans subject to the CBC's
selective credit controls and to comply with the relevant regulations and the
risk-based pricing rule.

Jun. 3 The CBC amended the Special Facility Regulations, including expanding
the size of the facility to NT$400 billion, extending the deadline for SME
applications to December 31, 2021, and stretching the applicable duration
of preferential interest rates on newly-approved cases through to June 30,
2022. Those amendments were effective from June 4, 2021.

17 The CBC's Board decided to keep the discount rate, the rate on refinancing
of secured loans, and the rate on temporary accommodations unchanged
at 1.125%, 1.5%, and 3.375%, respectively.

The CBC amended the name and the content of the Regulations Governing
the Establishment and Audit of Reserves on Stored Value Funds Received by
Specialized Electronic Payment Institutions, including broadening the scope
of specialized electronic payment institutions and modifying the calculation
method of reserve requirements on stored value funds, effective from July 1,
2021.

23 The CBC amended the Special Facility Regulations to increase the maximum

107
 Chronology of Events of the CBC in 2021

Date Event

loan amount for each small-scale business entity from NT$0.5 million to NT$1
million, effective from June 24, 2021.

Jun. 29 To simplify administrative procedures and to conform with the amendment

to The Act Governing Electronic Payment Institutions, which allows electronic
payment institutions and foreign migrant worker remittance institutions to
engage in domestic and foreign small-amount remittances business, the CBC
amended the Regulations Governing the Declaration of Foreign Exchange
Receipts and Disbursements or Transactions and the Directions for Banking
Enterprises While Assisting Customers to Declare Foreign Exchange Receipts
and Disbursements or Transactions, effective from July 1, 2021.

Aug. 24 The CBC signed an agreement of cooperation with the Central Bank of
Paraguay.

Sep. 14 The CBC amended the Regulations Governing Foreign Exchange Brokers,
strengthening the management of foreign exchange brokers while upholding
the principle of dispersion of share ownership by imposing shareholding limits
on the combined amount invested by both the investor and the investor's
related parties, effective from September 16, 2021.

23 The CBC's Board decided to adopt the following measures:

1. Keeping the discount rate, the rate on refinancing of secured loans, and
the rate on temporary accommodations unchanged at 1.125%, 1.5%,
and 3.375%, respectively.
2. Amending the Regulations Governing the Extension of Mortgage Loans
by Financial Institutions, including removing the grace period for a
second home loan taken out by a natural person for housing located
in the stipulated specific areas, and lowering the LTV ratio caps on land
loans and mortgage loans for idle land in industrial districts, effective
from September 24, 2021.

Oct. 1 The CBC met with 36 domestic banks and the National Federation of Credit
Cooperatives, R.O.C., to urge stronger risk management of real estate loans
in accordance with the CBC's selective credit controls and reiterated the

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CBC Annual Report 2021

Date Event

importance of observing the risk-based pricing rule.

Oct. 29 To continue helping pandemic-hit SMEs through the special accommodation

facility, the CBC announced that financial institutions having received

applications before the deadline of December 31, 2021 would remain

eligible for the special facility's accommodations.

Nov. 11 The CBC issued the New Taiwan dollar uncirculated coin set of the National

Parks of Taiwan Series - Shoushan National Nature Park.

15 The CBC reduced the monthly bidding amount for 2-year certificates of

deposit from NT$80 billion to NT$60 billion from November 2021 onwards.

Dec. 16 The CBC's Board decided to adopt the following measures:

1. Keeping the discount rate, the rate on refinancing of secured loans, and

the rate on temporary accommodations unchanged at 1.125%, 1.5%,

and 3.375%, respectively.

2. Amending the Regulations Governing the Extension of Mortgage Loans

by Financial Institutions, including lowering the LTV ratio caps on high-

value housing loans and third (or more) housing loans taken by natural

persons, land loans, loans for unsold new housing units, and mortgage

loans for idle land in industrial districts, effective from December 17,

2021.

The CBC amended the Special Facility Regulations, effective from December

16, 2021. For the facility's accommodations to banks, those due for

repayment by December 31, 2021 would be rolled over to June 30, 2022.

30 The CBC amended the Directions Governing Authorized Banks for Operating

Foreign Exchange Businesses Through Electronic or Communications

Equipment, removing the requirement of prior approval for authorized

banks to engage in foreign exchange business through electronic or

communications equipment that do not involve foreign exchange settlement

against the New Taiwan dollar, effective from December 30, 2021.

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 Financial Statements of the CBC

Financial Statements of the CBC

1. Balance Sheet
Unit: NTD Millions

December 31 December 31 Change

2021 2020 Amount %

Assets
Foreign Assets 15,338,720 15,261,054 77,666 0.51
Due from Domestic Banks 1,216,264 1,191,798 24,466 2.05
Loans and Accommodations to Financial Institutions 630,665 444,367 186,298 41.92
Other Assets 1,663,710 1,121,045 542,665 48.41
Total Assets 18,849,359 18,018,264 831,095 4.61

Liabilities
Currency Issued 2,948,411 2,604,479 343,932 13.21
Deposits of Financial Institutions 2,412,509 2,243,078 169,431 7.55
Certificates of Deposit Issued 9,482,650 9,168,090 314,560 3.43
Redeposits of Financial Institutions 2,152,960 2,152,262 698 0.03
Government Deposits 252,394 236,888 15,506 6.55
Other Liabilities 398,448 454,586 -56,138 -12.35
Total Liabilities 17,647,372 16,859,383 787,989 4.67

Equity 1,201,987 1,158,881 43,106 3.72

Total Liabilities and Equity 18,849,359 18,018,264 831,095 4.61

Note: Figures for 2021 are unaudited. Figures for 2020 are audited by the National Audit Office.

2. Income Statement
Unit: NTD Millions

2021 2020
Income
Interest Income 290,943 322,914
Fee Income 111 107
Foreign Exchange Gains 12,412 45,423
Revenue from Trust Investment 6,732 15,101
Subsidiaries' Investment Income 1,945 1,908
Others 437 631
Total Income 312,580 386,084

Expenses
Interest Expenses 48,355 57,577
Fee Expenses 221 221
Expenses for Coin Issuance 1,385 1,269
Expenses for Banknote Issuance 4,088 2,946
Allowances 48,568 104,797
Operating Expenses 1,459 1,463
Administrative Expenses 523 522
Others 1,325 1,040
Total Expenses 105,924 169,835

Net Income 206,656 216,249

Note: Figures for 2021 are unaudited. Figures for 2020 are audited by the National Audit Office.

110
CBC Annual Report 2021

Key Economic and Financial Indicators

of the Republic of China (Taiwan)
I. Business Indicators II. National Income and Aggregate Demand

NDC (1) TIER (2) Economic Per Unemploy- Annual Rate of Change in
Manufacturing Sector
Total Score Business Composite Index Growth Capita ment Industrial Production Indices
of (2006=100) Rate GNI Rate
Year Monitoring Labor Average Unit
(Average) Productivity Monthly Labor Cost
Indicators
General Manufacturing
Index Earnings Index
Manufacturing Services
(Per Employee) Growth Rate
(Average) Sector Sector (%) (US$) (%) (2016=100) (NT$) (%) (%) (%)

2012 17 91.72 90.66 2.22 21,922 4.24 89.98 45,238 2.16 0.50 0.56

2013 20 98.07 94.54 2.48 22,552 4.18 92.20 45,448 -1.98 3.21 3.40

2014 25 100.59 98.45 4.72 23,492 3.96 95.82 47,018 -0.93 6.41 6.83

2015 17 93.91 89.36 1.47 23,367 3.78 95.00 48,713 6.31 -1.28 -1.16

2016 21 97.13 87.05 2.17 23,684 3.92 100.00 49,162 -0.44 1.97 1.91

2017 24 98.96 92.56 3.31 25,704 3.76 103.53 50,678 -0.65 5.00 5.27

2018 23 95.99 94.93 2.79 26,421 3.71 105.97 52,948 3.23 3.65 3.93

2019 21 93.86 92.27 3.06 26,561 3.73 105.80 53,776 0.95 -0.35 -0.45

2020 24 94.11 91.64 3.36 29,202 3.85 114.86 54,004 -7.11 7.08 7.56

2021 37 104.20 96.97 6.45 33,638 3.95 129.23 57,385 -6.26 13.42 14.26
Notes: (1) NDC : National Development Council.
(2) T I E R : Taiwan Institute of Economic Research.

II. National Income and Aggregate Demand

Annual Rate Annual Rate of Gross Gross External Trade of Goods on Customs Basis
(in US Dollars)
of Change in Change in National Domestic
Gross Fixed Annual Rate of Change in Total Exports Annual Rate of Trade Annual Rate
Private Savings Investment
Year
Consumption Capital Private / / China Change Capital Balance of Change
in Equipment
Expenditure Formation Sector GNI GDP and U. S. Japan Europe ASEAN (3) in Export
Total
H. K. Imports Orders

(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (US$mn) (%)

2012 1.92 -1.28 1.38 30.45 22.69 -2.2 -3.8 -9.1 2.1 -7.9 9.6 -3.8 -7.3 28,848 1.1

2013 2.55 7.03 9.16 32.39 22.54 1.8 3.5 -1.5 -0.6 -3.3 3.8 0.3 6.0 33,481 0.4

2014 3.70 3.50 5.48 34.35 22.56 2.7 2.5 7.4 3.8 4.2 1.5 1.3 4.6 38,318 6.7

2015 2.86 2.68 4.28 35.46 21.73 -11.0 -12.5 -1.7 -2.8 -11.0 -14.1 -15.9 -1.5 48,053 -4.4

2016 2.64 3.44 4.08 35.21 21.63 -1.8 -0.4 -3.1 -0.4 1.0 -0.7 -3.0 10.5 49,975 -1.6

2017 2.70 -0.26 -1.16 35.61 20.97 13.0 16.0 10.1 5.7 10.2 14.2 12.2 -1.3 58,287 10.9

2018 2.05 3.19 2.45 34.77 22.24 5.9 6.1 7.4 10.8 8.7 -0.7 10.7 3.2 49,216 3.9

2019 2.25 11.12 12.03 34.74 23.80 -1.5 -4.2 17.1 2.1 -4.8 -7.2 0.3 21.2 43,506 -5.3

2020 -2.53 5.91 4.53 38.39 24.19 4.9 14.6 9.3 0.5 -5.5 -1.3 0.2 3.7 58,978 10.1

2021 -0.38 14.68 19.05 42.22 26.85 29.4 24.8 30.0 24.8 36.8 32.0 33.2 31.0 65,421 26.3
Note: (3) ASEAN: The Association of Southeast Asian Nations.

111
 Key Economic and Financial Indicators

Key Economic and Financial Indicators

of the Republic of China (Taiwan) Cont.
III. Prices IV. Money, Banking and Finance

Monetary Aggregates
Annual Rate of Change of Reserve Money (Daily Average)
Price Indices (%) (Daily Average)
M1B M2
Year
Annual Annual Annual
Wholesale Import Export
Amount Growth Amount Growth Amount Growth
CPI Core CPI (4) Price Price Price
Rate (5) Rate Rate

(in NT Dollars) (NT$bn) (%) (NT$bn) (%) (NT$bn) (%)

2012 1.93 0.99 -1.16 -1.28 -1.62 2,761.6 4.91 11,946.7 3.45 33,037.6 4.17

2013 0.79 0.66 -2.43 -4.45 -2.06 2,959.9 7.18 12,815.8 7.27 34,616.7 4.78

2014 1.20 1.27 -0.56 -2.09 0.10 3,165.4 6.94 13,836.1 7.96 36,576.7 5.66

2015 -0.30 0.78 -8.85 -12.94 -4.67 3,348.8 5.79 14,680.0 6.10 38,894.1 6.34

2016 1.39 0.84 -2.98 -3.08 -2.70 3,547.2 5.92 15,609.8 6.33 40,646.9 4.51

2017 0.62 1.04 0.90 1.36 -1.46 3,725.9 5.04 16,336.3 4.65 42,170.8 3.75

2018 1.35 1.21 3.63 6.13 1.45 3,934.9 5.61 17,205.3 5.32 43,653.4 3.52

2019 0.56 0.49 -2.26 -1.47 -2.82 4,187.7 6.42 18,435.5 7.15 45,163.7 3.46

2020 -0.23 0.35 -7.77 -10.23 -7.21 4,547.3 8.59 20,340.8 10.34 47,803.2 5.84

2021 1.96 1.33 9.44 10.53 6.54 5,101.3 12.18 23,654.1 16.29 51,970.7 8.72
Notes: (4) Core CPI refers to CPI excluding the categories of fruit, vegetables and energy.
(5) The annual growth rates are adjusted for most recent changes both in required reserve ratios (on Jan. 1, 2011), and in the share of required reserves
deposited with the Bank's B account (Nov. 2001).

IV. Money, Banking and Finance

Monetary Financial Institutions (End of Period) Non-performing Interest Rates (%)

Loan
Deposits Loans & Investments Ratio of CBC's Interbank 31-90 Days 10-year Five Major
Year Discount CP Rate Gov't Bond Domestic Banks (7)
Domestic
Annual Annual Rate Call Loan in Rate in
Banks (6) 1-year New Loan
Amount Rate of Amount Rate of Secondary Secondary Deposit Rate
Change Change (End of Period) (End of Rate Market Market Rate
(End of
(NT$bn) (%) (NT$bn) (%) (%) Period) (Average) Period) (Average)

2012 33,300.4 3.09 25,548.8 5.69 0.40 1.875 0.428 0.79 1.21 1.35 1.61

2013 35,062.4 5.29 26,720.6 4.59 0.38 1.875 0.386 0.69 1.46 1.35 1.70

2014 37,133.9 5.91 28,110.6 5.20 0.25 1.875 0.387 0.62 1.60 1.35 1.68

2015 39,355.8 5.98 29,406.3 4.61 0.23 1.625 0.353 0.58 1.39 1.21 1.67

2016 40,717.4 3.46 30,549.2 3.89 0.27 1.375 0.193 0.39 0.82 1.07 1.47

2017 42,094.0 3.38 32,022.7 4.82 0.28 1.375 0.178 0.44 1.06 1.07 1.41

2018 43,195.8 2.62 33,747.5 5.39 0.24 1.375 0.183 0.49 0.94 1.07 1.37

2019 45,086.1 4.38 35,422.4 4.96 0.21 1.375 0.182 0.55 0.74 1.07 1.39

2020 49,219.7 9.17 37,826.6 6.79 0.22 1.125 0.102 0.39 0.48 0.82 1.27

2021 52,757.0 7.19 40,999.6 8.39 0.17 1.125 0.081 0.26 0.44 0.82 1.20
Notes: (6) The data are based on the new NPL definition released by the Financial Supervisory Commission in Dec. 2001, which include loans under surveillance.
(7) The five major domestic banks are Bank of Taiwan, Taiwan Coorperative Bank, First Commercial Bank, Hua Nan Commercial Bank and Land Bank of Taiwan.
The deposit/loan interest is based on a floating basis of the interest rate.

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CBC Annual Report 2021

Key Economic and Financial Indicators

of the Republic of China (Taiwan) Cont.
V. Securities Market VI. Balance of Payments and Foreign Exchange Market

TWSE(8) Stock Market Bond Market Balance of Payments Foreign Exchange Daily
Exchange Average
Outstanding Current Capital Financial Changes
Stock Total Total Trading Value Reserves Rate Value in
Year Price Trading Account Account Account in Reserve Foreign
Index Value Assets Exchange
Share of
Transactions
(End of Period) Outright
(1966=100) (End of Period) (End of Period)
(Average) (NT$bn) Transactions
(NT$bn) (US$mn) (US$bn) (NT$/US$) (US$bn)
(%)

2012 7,481 20,238.2 7,575.1 86,551.7 21.30 42,925 -24 31,465 15,484 403.17 29.136 23.39

2013 8,093 18,940.9 8,104.6 69,226.1 19.78 49,937 67 41,053 11,318 416.81 29.950 28.93

2014 8,992 21,898.5 8,726.8 68,032.4 21.62 60,607 -8 50,531 13,015 418.98 31.718 31.29

2015 8,959 20,191.5 8,859.5 67,725.7 22.76 72,730 -5 64,972 15,011 426.03 33.066 33.35

2016 8,763 16,771.1 8,720.0 66,817.9 21.81 71,222 -9 58,490 10,663 426.03 32.279 28.92

2017 10,208 23,972.2 8,801.5 61,583.5 20.36 83,053 -12 74,992 12,467 451.50 29.848 28.62

2018 10,620 29,608.9 8,942.4 64,822.1 17.79 70,843 63 58,810 12,499 461.78 30.733 32.08

2019 10,790 26,464.6 8,978.0 57,888.5 18.47 65,161 -3 57,659 16,658 478.13 30.106 32.45

2020 12,075 45,654.3 9,473.0 52,504.7 21.01 94,956 -9 46,251 48,342 529.91 28.508 33.08

2021 16,938 92,290.0 10,056.8 36,138.8 19.68 116,123 3 104,604 20,993 548.41 27.690 33.02
Note: (8)TWSE: Taiwan Stock Exchange Corporation.
Sources: 1. National Development Council.
2. Taiwan Institute of Economic Research.
3. Department of Statistics, Ministry of Economic Affairs.
4. Statistical Abstract of National Income, DGBAS, Executive Yuan, February 2022.
5. Monthly Statistics of Exports and Imports, Ministry of Finance, February 2022.
6. Banking Bureau, Financial Supervisory Commission.
7. Financial Statistics Monthly, CBC, February 2022.
8. Balance of Payments, CBC, February 2022.
9. Taiwan Stock Exchange Corporation.

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 Introduction to CBC Website

APPENDIX: CENTRAL BANK OF THE REPUBLIC OF CHINA (TAIWAN) WEBSITE

I. The Bank's Homepage

https://www.cbc.gov.tw/en/mp-2.html

Introduces the Bank's operations regarding monetary policy and payment systems,
currency issuance, foreign exchange, government securities services, and financial
stability and bank supervision, and contains other crucial information such as press
releases, statistics and publications, and general information about the Bank.

▼ Key Indicators
Displays data charts of the Bank's key indicators that are periodically updated, such as
the NT$/US$ closing rate, foreign exchange reserves, the monetary aggregate M2 annual
growth rate, and interest rates.

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CBC Annual Report 2021

▼ FAQ

https://www.cbc.gov.tw/en/lp-2168-2.html

Provides a list of frequently asked questions and answers regarding the Bank's operations
and policy-related issues. Information here is updated as needed.

II. Statistics and Publications

▼ Statistics

https://www.cbc.gov.tw/en/np-507-2.html

Presents statistical data released by the Bank for browsing, querying, and downloading.

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 Introduction to CBC Website

▼ Publications

https://www.cbc.gov.tw/en/lp-535-2.html

 Provides access to periodical publications, including statistical publications (e.g., financial

statistics, balance of payments, and condition and performance of domestic banks),
financial stability reports, and annual reports.

 Offers occasional notes or reports on topics related to the Bank's operations or international
and domestic economic and financial conditions.

III. Monetary and Financial Knowledge Hub (in Chinese Only)

https://knowledge.cbc.gov.tw/front/index

Introduces various kinds

of monetary and financial

knowledge with interesting,

simply-explained, and easy-

to-understand contents to

facilitate public understanding

of the Bank's policies and

operations. Information

here covers a wide range

including short reports on

special topics such as fintech

and CBDC, the latest news

on central banks worldwide,

major events in monetary and

financial history, and current

issues in finance.

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CBC Annual Report 2021

IV. Virtual Money Museum and Virtual Exhibition Hall

▼ Virtual Money Museum

https://museum.cbc.gov.tw/web/en-us

Presents information about currency issuance including the history of banknotes and
coins, banknotes and coins in circulation, coin sets and commemorative banknotes and
coins, and security features of the New Taiwan Dollar.
The webpage has been revamped with the "responsive web design" technique, making
it more convenient for users to navigate via computers and mobile devices.

▼ Virtual Exhibition Hall (in Chinese Only)

https://museum.cbc.gov.tw/museum

Allows viewers to browse banknotes featured in various themes.

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 Introduction to CBC Website

V. Contacting the Bank

https://www.cbc.gov.tw/en/sp-opma-form-2.html

For questions or suggestions, please contact the Bank through the following steps. We will
reply to you within 7 working days.

VI. Official Social Media Channels and Mobile Apps (in Chinese Only)

The Bank also provides the latest news and announcements on social networking
sites and our official mobile apps. Stay up-to-date and communicate with us by
following the Bank's social media accounts as below and/or downloading our
mobile apps on iOS or Android devices.

Facebook https://www.facebook.com/cbc.gov.tw/

YouTube https://www.youtube.com/user/TheCBCTube

Flickr http://www.flickr.com/photos/cbcbank

Android App https://play.google.com/store/apps/details?id=hyweb.mobilegip.gip_cbc

iOS App https://appsto.re/tw/LyAH6.i

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CBC Annual Report 2021

Abbreviations
BIS Bank for International Settlements

BoJ Bank of Japan

BoK Bank of Korea

BOP Balance of payments

CBC Central Bank of the Republic of China (Taiwan)

CBDC Central bank digital currency

CD Certificate of deposit

CGSS Central Government Securities Settlement System

CIFS CBC Interbank Funds Transfer System

COFER Currency Composition of Official Foreign Exchange Reserves

COVID-19 Coronavirus disease

CP Commercial paper

CPI Consumer price index

DBU Domestic banking unit

DGBAS Directorate-General of Budget, Accounting and Statistics

DLT Distributed ledger technology

DVP Delivery-versus-payment

ECB European Central Bank

ETF Exchange traded fund

Fed Federal Reserve (System)

Fintech Financial technology

FISC Financial Information Service Co., Ltd.

FSC Financial Supervisory Commission

FX Foreign exchange

GDP Gross domestic product

GNI Gross national income

IMF International Monetary Fund

LPR Loan prime rate

LTV Loan-to-value

NCCC National Credit Card Center of R.O.C.

NCD Negotiable certificate of deposit

119
 Abbreviations

NDC National Development Council

n.i.e. not included elsewhere

NPL Non-performing loan

NTD New Taiwan dollar

OBU Offshore banking unit

OIU Offshore insurance unit

OSU Offshore securities unit

PBoC People's Bank of China

PSB Pioneer Stock Board

PoC Proof of concept

PVP Payment-versus-payment

ROC Republic of China

SEACEN South East Asian Central Banks

SITE Securities investment trust enterprise

SME Small and medium-sized enterprise

TAIEX Taiwan Stock Exchange Capitalization Weighted Stock Index

TCH Taiwan Clearing House

TDA Treasury deposit account

TDCC Taiwan Depository and Clearing Corporation

TDR Taiwan depositary receipt

TIER Taiwan Institute of Economic Research

TPEx Taipei Exchange

TWSE Taiwan Stock Exchange Corporation

VaR Value at risk

WPI Wholesale price index

120
Central Bank of the Republic of China (Taiwan) Annual Report 2021
Publisher: Chin-Long Yang
Editor: Department of Economic Research
Central Bank of the Republic of China (Taiwan)
Publishing Date: June 2022 First Issue Date: June 1962
Published by: Central Bank of the Republic of China (Taiwan)

Address: 2, Roosevelt Rd., Sec. 1, Taipei City 10066, Taiwan (R. O. C.)
Tel: 886 - 2 - 2393 - 6161
http://www.cbc.gov.tw
Distributors:

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Address: 600, Junfu 7th Rd. Taichung City 40642, Taiwan (R. O. C.)
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Address: 1F, 386, Fusing N. Rd., Taipei City 10476, Taiwan (R. O. C.)
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Online Bookstore: http://www.sanmin.com.tw
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Price: NT$250 GPN: 2005100019 ISSN: 1017-9674

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