It has also broadened the scope for the writing off of bad debts and has speeded up the process for doing so in order to strengthen the ability of banks to respond to problem loans. The government intends to strengthen and simplify the legal process with regard to what exactly constitutes a bad debt. Banks will in future be able to determine themselves when a debt is deemed to be bad. Finally, although the average return on assets of Taiwan banks has declined, these banks continue to maintain high capital adequacy ratios. On this basis, banks are still well able to contain risk.
Domestic prices are stable, and there are no signs of deflation.
Under the precondition of price and exchange rate stability, the Central Bank of China has adopted a moderately easy monetary stance. The Taiwan economy is expected to achieve moderate growth as the Asian economies recover. The US Department of Commerce has also predicted that Taiwan ' s will achieve the third highest economic growth rate among the US ' s top twenty export markets in a recent report. Moreover, Professor Jeffrey Sachs of the Harvard Institute for International Development has pointed out that the Asian economies will gradually recover and the outlook for these countries has taken a turn for the better. The Taiwan economy should continue to grow at a moderate pace.