The Financial Supervisory Commission yesterday took another step to fight against “hot money” for currency speculation, saying it would prohibit overseas funds from being parked in local banks’ time deposit accounts, effective immediately.
The commission said in a press statement that overseas funds that have been parked in three-month time deposit accounts would not be allowed to remain in a time deposit account once their terms expire.
The commission said the regulatory revision was based on recommendations from the central bank.
Before the revision, overseas funds were allowed to be parked in three-month time deposit accounts, with the term repeatedly being extended by another three months.
“[Overseas funds] should either exit or invest [in local assets],” commission chief secretary Lu Ting-chien (盧廷劼) told a media briefing yesterday, adding that the central bank finds it odd that foreign funds are parked in time deposit accounts, which currently pay a very low interest rate.
To rein in speculative hot money, the central bank has reportedly been tightening its grip on overseas funds parked in current saving accounts for more than two weeks.
As of the end of September, overseas capital inflows had accumulated NT$4.6 trillion (US$142.2 billion), 0.21 percent of which was parked in time deposit accounts, the commission’s statistics showed.
No revisions, however, were made to the regulation that stipulates that up to 30 percent of overseas capital inflows are allowed to be invested in non-equity destinations including government bonds and exchange derivatives, the commission said.
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