Taiwan’s central bank denies considering exchange controls on foreign investors

Taiwan’s central bank issued a statement on the evening of September 28 to clarify a local media report citing Governor Chin-long Yang’s response to a discussion on the legislative yuan. The central bank denied that Yang said it planned to impose currency controls on capital outflows in the event foreign investors hand over massive amounts of capital, such as more than $100 billion, in a short period of time. of time.

The central bank points out that Taiwan has $549 billion in foreign exchange reserves and $691.4 billion in foreign currency liquidity, not to mention that Taiwan is a net creditor, with $280 billion in foreign currency-denominated deposits held by local residents and with net cash. overseas assets of over US$800 billion. “Taiwan has safely weathered the Asian financial crisis of 1997, the global financial tsunami of 2008 and the European debt crisis of 2012,” the statement said, stressing that the central bank has always adopted aggressive foreign exchange management measures. and effective in maintaining financial market stability.

Foreign investors have been selling their Taiwanese stocks and seeing massive capital outflows in response to falling international stock markets amid aggressive interest rate hikes by the US Federal Reserve since early 2022, but the stock market Exchange rate in Taiwan remains stable. “If further interest rate hikes in the United States are to trigger a new wave of capital outflows, we have sufficient capacity to take action in response to market volatility,” the central bank said.

Citing examples from the history of cross-Strait tensions, the central bank’s statement pointed out that “Taiwan has never imposed foreign exchange controls, even during the time of Beijing’s military threat in 1995 and the beginning of August 2022 (according to US House of Representatives Speaker Nancy Pelosi’s visit), we are confident that we are capable of maintaining financial market stability through our currency management measures.”

The central bank insisted that when lawmakers wondered what the central bank would do in the event of cross-Strait tension or a significant rise in U.S. interest rates to entice foreign investors to send in massive amounts of capital abroad within a short period of time, the governor’s response was, “We will NOT impose foreign control measures.”

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