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.
The rise of the cryptocurrency dogecoin has reached a new level after the token was used to pay for a lunar satellite launch. SpaceX, Elon Musk’s commercial rocket firm, is to embark on a moon voyage next year carrying a so-called cubesat — a mini-satellite used for space research — from Geometric Energy Corp that has been paid for entirely in dogecoin. The development is the latest twist in the saga over the digital token, which started as a joke in 2013, but is now a dominating Internet meme and sitting on a 21,000 percent rally in the past year. Musk has
CAPACITY EXPANSION: Construction of the site, which is to be the firm’s first mRNA production facility outside of Europe, is to begin this year and likely finish in 2023 COVID-19 vaccine maker BioNTech SE yesterday said it would build a Southeast Asia headquarters and manufacturing site in Singapore to produce hundreds of millions of messenger RNA (mRNA)-based vaccines per year. Construction of the site would start this year, and it could become operational by 2023, the German company said in a statement. “With this planned mRNA production facility, we will increase our overall network capacity, and expand our ability to manufacture and deliver our mRNA vaccines and therapies to people around the world,” BioNTech chief executive Ugur Sahin said. The vaccine produced by BioNTech jointly with Pfizer Inc of
OUTBREAK: About 200 of the airline’s 1,200 pilots are not able to work. Most of them have been quarantined to prevent further infection, but 12 have COVID-19 China Airlines Ltd (CAL,中華航空) yesterday confirmed that it would temporarily reduce its cargo flight services to cope with a pilot shortage, as one-sixth of its pilots have been sidelined by a COVID-19 outbreak. “We are working out a new schedule,” the airline said in a statement after local news media reports on Saturday said that it would be reducing its cargo services from Wednesday, primarily affecting US destinations. CAL declined to give details about its new operating plan, but the reports said that it would be suspending its cargo flights to Dallas Fort Worth International Airport, Hartsfield-Jackson Atlanta International Airport and
The Financial Supervisory Commission (FSC) yesterday fined Citibank Taiwan Ltd (花旗台灣) NT$10 million (US$357,194) and DBS Bank Taiwan (星展台灣) NT$6 million for breaches of the nation’s anti-money laundering (AML) regulations. The NT$10 million fine is the highest penalty that it has imposed on a domestic bank, the commission said. Citibank Taiwan failed to set up a sound mechanism for evaluating clients’ risk of money laundering and for detecting suspicious transactions, Banking Bureau Deputy Director-General Huang Kuang-hsi (黃光熙) told a news conference in New Taipei City. The bank based its AML policies on those of its US-based parent company, Citigroup Inc, but the policies