Minister says stabilization fund should be abolished

Minister of Finance Lee Yung-san (李庸三) yesterday said that, in the long run, the NT$500 billion National Stabilization Fund (NSF, 國安基金) should be scrapped, suggesting that no state-run share-buying body should exist to intervene in Taiwan's stock market.

"Before terminating the fund, its shares should be sold gradually to avoid panicking the stock market," Lee told the legislature's finance committee yesterday.

He added that the fund's committee plans to propose terminating the fund's use after a certain period of time. Lee, however, did not give a time frame.

According to the ministry, billions had been used to prop up the stock market during the 1996 missile crisis and other times of political instability. But, as the TAIEX yesterday rose to 6,059.06, the fund may have lost less than NT$220 billion on paper, officials added.

Officials at the ministry are expecting the fund to break even when the index crosses the 6,500 point line in the near future, local media reported.

One day before Lee's remarks, Vice Premier Lin Hsin-yi (林信義), however, endorsed the continued use of the fund's function as a short-term fix to restore the public's confidence in the stock market.