M2, the broad measure of money supply, grew 17.3 percent year-on-year by the end of August, 1 percentage point higher than the previous month, the People's Bank of China announced Tuesday.

Loosening monetary policy will help China's economy grow stably and quickly, analysts said.

The acceleration of the monthly money supply is mainly caused by the increasing fixed deposit of corporations and individuals, the central bank said. M1, or the narrow measure of money supply, rose by 11.5 percent by the end of August, 0.5 percentage points higher than the previous month. Money in circulation went up 9.4 percent, 0.3 percentage points higher than the previous month.

China has set up a 15-percent target for money supply growth in 2005 to fuel its booming economy on the one hand and rein in the growth of some overheated sectors on the other.

By the end of August, outstanding yuan-denominated loans stood at 18.78 trillion yuan (2.3 trillion US dollars) at all financial institutions, up 13.4 percent on a yearly basis.

The growth was 0.7 percentage points lower than a year ago, and 0.3 percentage points higher than a month ago, the central bank reported.

The outstanding yuan deposits rose by 18.3 percent to 27.51 trillion yuan (3.4 trillion dollars) by the end of last month, it said.

Source: Xinhua