The Ministry of Finance has decided to react to complaints by legislators that a conflict of interest has been created by the current management scheme of the National Stabalization Fund (
"The finance ministry is the regulatory agency over the securities market ... it's a good idea to separate the stabilization fund from the ministry," Minister of Finance Yen Ching-chang (
After the fund reported over NT$18 billion in losses in the first quarter of this year, lawmakers have demanded that someone take responsibility.
"The total losses of the four government funds and the stabilization fund last year was NT$187.3 billion," said KMT lawmaker Chu Li-luan (朱立倫).
"While the NT$58 billion loss of the Postal Saving Fund (
Chu also questioned the fact that Lin Tzong-yeong (
In response, the Control Yuan is considering giving Lin a reprimand, local media reported.
The report also said Lin may resign as the fund's executive secretary, handing over control of the fund to Vice Premier Lai In-jaw (
In a meeting held last Friday, the funds management committee appointed Yen as the team leader on a special task force to study how the massive shareholding in the fund could be disposed. Finance ministry officials said the policy direction is likely to sell the shareholding in overseas markets before unloading them on domestic market in an effort to minimize the impact on the domestic stock market.
The task force is expected to complete its study before July, when the management committee holds its next meeting. Finance ministry officials said the preliminary share disposal plan will likely be done in several stages.
The finance ministry has already consulted with foreign advisors, such as Goldman Sachs and ABN AMRO, regarding the possibility of disposing shareholdings by issuing American depository or global depository receipts. After unloading shares overseas, the ministry would consider using discretionary managed account services provided by domestic securities firms to deal with local share sales.
The stabilization fund was launched at the beginning of last year to supplement the four government-managed insurance and pension funds, which routinely intervene in the stock market to boost sagging share prices. The stabilization fund's goal is to support shares when non-economic factors -- such as saber-rattling from China or a natural disaster such as the 921 earthquake -- trigger panic-selling.
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