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FSC says Taiwan's risk exposure to Chinese debt under control
Central News Agency
2014-04-14 11:16 PM
Taipei, April 14 (CNA) The Financial Supervisory Commission (FSC) denied reports on Monday that Taiwan's financial sector is overexposed to Chinese debt, saying an effective risk control system is in place. The FSC said the volume of Chinese yuan deposits and Chinese bonds held by Taiwan's financial system remains within a manageable range and a rigorous risk control system is in place to handle any potential problems. Media reports said that Taiwan's financial institutions hold about NT$2 trillion (US$66.28 billion) in Chinese yuan and bonds, which they said concentrated too many assets in a single basket and left the financial sector overexposed to risk. According to statistics published by Taiwan's central bank at the end of December 2013, local banks held US$64.9 billion (or NT$1.947 trillion) in Chinese yuan-denominated international bonds, which was only about 4.98 percent of the NT$39.584 trillion in total assets held in the domestic banking system, the FSC said. Among the measures in place to limit the financial sector's risk exposure, local banks cannot invest more than 15 percent of their net value in branches or other investments in China while financial holding companies cannot invest more than 10 percent of their net value. As of the end of February, the investment in China by Taiwan's banking system and financial holding companies accounted for 3.45 percent and 0.67 percent, respectively, of their net values. (By Stacey Wu and Lilian Wu)
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