Taiwan

Years

Targets and attainment

Classification

1974-78

exchange rate fixed to USD, no autonomous forex market, with single change (appreciation) July 1978; monetary policy has multiple objectives, pursued mainly via interest rates within banking system dominated by domestic banks owned and controlled by government; fiscal deficit mostly well under control; monetary growth strongly affected by trade surpluses and capital inflows

augmented exchange rate fix AERF

1979-92

forex market established early 1979 with rate determined in principle by panel of bank managers on basis of USD bought and sold previous day, but in practice heavily managed float; small and frequent depreciations and appreciations mostly responding to strength of USD; 1980s interest rate deregulation; money market established 1976 comes to provide market-determined interest rate, and by mid-late 1980s main monetary policy instrument is OMOs, mainly in central bank bills and CDs (repos from 1983) but also redeposits from postal savings system, in operations to sterilise large inflows; from mid-1980s central bank has targets for money supply with reserve money as operating target, targets published from 1992 but overshot that year

loosely structured discretion LSD

1993-2002

wide (5% band, except 6% in 1998, Asian financial crisis) converging monetary targets attained roughly in first few years and then more precisely and consistently; exchange rate moving more widely from 1997 (partly in response to Asian crisis); OMOs in CDs as main monetary instrument; financial sector reforms covering reserve requirements, OMOs, interest rates, interbank forex market, payments system; rise in market as opposed to bank financing

loose converging monetary targets LCMT

2003-19

wide (4% band) stationary monetary targets consistently attained; exchange rate moving within relatively narrow range (‘dynamic stability’), balance of payments surpluses persist; continuing gradual financial sector development in areas of government bonds, forex market, interest rates, payments system, capital flows, financial infrastructure, and SME and housing finance; macroprudential measures from 2010 of increasing sophistication, designed to deter property market instability; OMOs in CDs remain main instrument of monetary policy with focus on absorbing excess liquidity and controlling bank reserves so as to sustain steady growth in monetary aggregates; minutes of monetary policy meetings published from 2017, press conferences after meetings livestreamed from 2018

loose monetary targets LMT

2020-23

2020 target range for M2 becomes reference range, with policy decisions to be based on variety of economic and financial indicators as well as monetary growth; reference range exceeded 2021 and (by less) 2022 but met 2023; policy response to Covid-19 enables economic growth to be sustained (but slower); from late 2020 some use of macroprudential tools and credit controls on property lending, reinforced in 2022-3 by rises in reserve requirements; continued use of interest rates and OMOs  

loosely structured discretion LSD