Sat, Nov 29, 2008 - Page 12 News List

Government wants more mergers in financial industry

LESSSONS LEARNED A free-market economy is essential for maintaining economic growth, Vice Premier Paul Chiu told a forum in Taipei yesterday

By Shih Hsiu-chuan  /  STAFF REPORTER

Vice Premier Paul Chiu (邱正雄) says the government will push for mergers between financial institutions, despite the scandals during the second phase of financial reform under the former government.

The banking system is fundamentally sound as the ratio of non-performing loans stood at 1.53 percent, the capital adequacy ratio was 11.45 percent and the coverage ratio stayed at 66.93 percent as of the end of September, Chiu said.

State-run banks have been an important stabilizing force as their deposits and loans accounted for more than 50 percent of the total deposits and loans of all financial institutions in the country, he said.

“But we need to continue with financial mergers and acquisitions,” Chiu said during a keynote speech on the government’s reaction to the recent financial tsunami at a forum hosted by the National Policy Foundation.

Although the global financial crisis has cast doubt on capitalism, maintaining a free-market economy is needed to boost growth, as the G20 meeting in Washington this month concluded, he said.

The G20 summit had pointed out several lessons that could be learned from the crisis and serve as a model for future financial reform, he said. These included enhancing international cooperation, strengthening supervision of financial commodities and derivatives, deepening transparency of financial markets and increasing the capital adequacy ratio.

Vice President Vincent Siew (蕭萬長) told the forum that the arrival of a recession before the root causes of financial crisis could be resolved had made it impossible to predict the twists and turns of the crisis or when it will end.

Siew, who leads an economic advisory task force mandated to provide recommendations on improving the economy to President Ma Ying-jeou (馬英九), applauded the Cabinet’s policies to provide unlimited guarantees for banking deposits, to write budgets to increase public construction works, to create job opportunities and to support the stock market.

Siew said that the economic stimulus plans would solve the unemployment problem and turn the negative growth resulting from the plunge in exports since September into positive growth from the second quarter of next year.

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