Taiwan’s central bank cut the interest rate it pays banks for funds held in reserve yesterday after slashing its benchmark interest rate by the most in 26 years last week.
The amount of interest the central bank pays on reserves originating from passbook deposits fell to 0.275 percent from 0.374 percent, while the amount paid on time deposits dropped to 1.421 percent from 2.173 percent effective yesterday, the central bank said in a statement yesterday.
The interest is paid to financial institutions’ B accounts, which account for 55 percent of their reserves, the central bank said. The monetary authority doesn’t pay interest on the A accounts, which make up the rest of the reserves.
The move will cut costs for the central bank as it will need to pay less to the banks who deposit the required reserves with it, Cheng Cheng-mount (鄭貞茂), an economist at Citigroup Inc, said yesterday.