The central bank yesterday kept the rediscount rate unchanged at 1.375 percent for the ninth consecutive quarter, saying a properly loose monetary stance would help stabilize financial markets and stimulate economic growth as uncertainty intensifies due to trade frictions.
The monetary policymaker also raised its forecast for annual GDP growth this year to 2.7 percent, from the 2.68 percent it predicted in June, but said it was concerned that the economy could slow in the second half and beyond.
“A lenient monetary policy is favorable for financial market stability and economic growth,” central bank Governor Yang Chin-long (楊金龍) told a news conference after the bank’s quarterly board meeting.
Global funds have pulled away from emerging markets, including Taiwan, rattling their currencies and bourses, in the wake of rate hikes by the US Federal Reserve and increasing tariffs between the US and China, Yang said.
Global trade has showed signs of a slowdown, but the effect on Taiwan appears limited thus far, he said.
Compared with three months earlier, the central bank’s monetary policy stance has slightly tightened, as the New Taiwan dollar holds relatively stable, while most other currencies lost considerable value against the US dollar, Yang said.
Most global central banks stand by an accommodative stance, except the Fed, which raised its policy rates by 25 basis points on Wednesday, he said.
For the first time, Yang called for proper regulation of peer-to-peer (P2P) lending, which has fast-growing popularity worldwide, thanks to the prevalence of the Internet and digital devices.
P2P operations make microfinance, or loans, available for people over the Internet. Such operations accounted for US$87 billion in worldwide transactions last year, accounting for 0.13 percent of total lending, the central bank’s report showed.
However, 4,800 P2P platforms have collapsed in China as of last month, affecting 1.32 million people with loans amounting to 96 billion yuan (US$13.9 billion), Yang said.
P2P lending remains small in Taiwan and would not pose as serious a threat as in China, but regulators should take precautions to ensure their sound operations, Yang said.
Cooperation between P2P operators and conventional banks could help address shadow banking and other risks, he said.
The governor threw his weight behind reverse mortgage operations, saying they could help revive idle property assets, support the financial needs of elderly people and stimulate private consumption.
The government could learn from the US and Hong Kong on reverse mortgage operations and take steps to boost their acceptance among local home owners, Yang said.
Regulators should create professional consultancies to provide advice and set up mediatory agencies to protect users, he said, adding that banks should be given incentives to provide reverse mortgages.
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