President Chen Shui-bian (
He said using the issue as a political tool only impeded reform.
While there was much room for improvement, the direction of the second stage financial reform was correct and the intention was righteous, he said.
"To continue the reform is necessary," Chen said in a speech at the opening of an international forum in Taipei on economy, finance and accounting. "The second financial reform did not fail. It just hasn't succeeded yet."
Chen said what concerned him most when he came to office in 2000 was not China but a possible financial crisis.
The previous administration had allowed the number of banks and branches to increase dramatically between 1993 and 2000, Chen said. Fierce competition among banks fueled the alarming non-performing loans (NPL) ratio, he said.
Six financial-related bills were enacted in 2001 to pave the way for the first wave of financial reform. In August 2002, the government set the goal of lowering the NPL ratio to 5 percent and raising the average capital adequacy ratio (CAR) to 8 percent within two years.
The goal was achieved ahead of time, with the NPL ratio down to 2.32 percent and CAR up to 10.11 percent.
Following the Economic Development Advisory Conference in 2001, the government decided to push a second wave of financial reform, including overhauling the credit departments of farmers' and fishermen's associations and establishing the Financial Monitoring and Management Committee in July 2004, Chen said.
In October 2004 the government set four goals for the second reform phase -- to have three financial institutions with individual market shares of at least 10 percent, halve the number of state-owned banks to six, halve the number of financial holding companies to seven and have at least one domestic financial institution operated by a foreign entity or listed overseas.
Chen said he hoped financial issues could be separated from politics and that economic issues were not used as political tools to deter financial reform.
In other news, Chen solicited opinions from foreign experts on whether to designate Oct. 25 as the nation's independence day. He said he would like to know what the National Committee on American Foreign Policy thought.
Committee president George Schwab said they would be happy to offer opinions off the record.
The idea was proposed by Bruce Herschensohn, a Pepperdine University professor during a meeting with Chen on Tuesday.
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