The central bank yesterday warned of rising risk from China due to its slowing economic growth, given that China is a huge market and has abundant development opportunities for Taiwan’s financial sector.
The central bank made the comments in its annual financial stability report, which included its review of the performance of the nation’s financial system over the past year and risks it foresees.
“The nation’s banks may face various risks and limitations following their rising investment and development in China,” Su Dao-min (蘇導民), deputy head of the monetary authority’s Banking Examination Department, told a press conference.
Recent slowing economic growth in China has led Chinese companies to post lower profits, which means the banking sector in China faces higher credit risks, the central bank said in the report.
In addition, the significant shadow banking system in China may have a negative effect on the stability of its banks, it added.
The report said that policy transparency in China is still lower than average, which may see Taiwanese banks facing difficulty developing in the market.
After a market-oriented reform of interest rates policy launched last year by the People’s Bank of China, China’s banking sector might face severe competition and a lower interest-rate spread in the future, as could players from Taiwan, the report said.
Meanwhile, the central bank said that average property prices in certain areas of New Taipei City may fall this year, with the volume of transactions in Taiwan continuing to slow in the second half of the year.
Transaction volume — measured by the number of registrations of building ownership transfers — totaled 79,000 units in the first three months of the year, down 0.73 percent from the same period last year, reflecting the slowing trend in transaction momentum in the nation’s property market, central bank data showed.
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