The central bank yesterday rejected suggestions that it use the nation’s foreign-exchange reserves to establish a sovereign wealth fund, saying the two differ in operations and objectives.
Local media reported last week that former minister without portfolio Schive Chi (薛琦) had called for the establishment of a sovereign wealth fund to better manage the nation’s forex reserves, raise their profitability and help narrow the nation’s deficit.
However, the central bank did not agree, issuing a 49-page reference report in response.
“There are foreign-exchange reserves to maintain stability in the foreign-exchange market,” the bank said in the report.
As such, the reserves are only used to invest in financial instruments that have a high degree of security and liquidity, although they offer lower returns, the report said.
Sovereign wealth funds, on the other hand, can afford to take higher risks in exchange for higher returns, the bank said.
Although the nation’s forex reserves hit a record US$423.45 billion at the end of last month, more than 70 percent of these were in the form of marketable securities and New Taiwan dollar deposits held by foreign portfolio investors, with the real operating amount only standing at US$121.8 billion, central bank data showed.
Given these concerns, it is not suitable to use forex reserves to establish a sovereign wealth fund, the bank said, adding that pension funds in Taiwan already operate like sovereign wealth funds.
The central bank added that maintaining a dynamic yet stable New Taiwan dollar exchange rate was beneficial to the development of the nation’s financial industry.
The remarks were in response to a statement earlier this month by Taiwan Academy of Banking and Finance chairman Shea Jia-dong (許嘉棟), who said that the central bank’s focus on maintaining a steady currency rate has hampered the nation’s bid to become a regional financial center.
Citing the examples of Hong Kong, Singapore and Switzerland, which have stable currencies, but thriving financial industries, the central bank said its exchange rate policy has not hindered market liberalization and the development of the nation’s financial service providers.
Moreover, after the global financial crisis in 2008, maintaining financial stability has become an even more important issue for major countries worldwide, the central bank said, adding that too much volatility might erode a nation’s financial stability.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts