Three current and former members of Taiwan’s central bank board are calling for an overhaul of its currency policy, saying that efforts to tamp down on the New Taiwan dollar’s appreciation are increasingly having a negative effect on the economy.
Board members Li Yi-ting (李怡庭) and Chen Shiu-sheng (陳旭昇), and ex-member Wu Tsong-min (吳聰敏), have coauthored a book with writer Ariel Chen (陳虹宇) to be published next month.
The authors acknowledge that a devalued currency might have been beneficial to Taiwan’s economic growth in the past, but it has also driven up costs of imported materials and equipment, according to an excerpt of the book.
That has inhibited the incentives for businesses to move up the value chain, keeping them tied to a low-cost production model, they wrote.
For the two decades former central bank Governor Perng Fai-nan (彭淮南) was at the helm, from 1998 to 2018, the central bank closely managed the level of the NT dollar, ensuring it did not appreciate beyond NT$28.50 to the greenback. He also oversaw a more than 440 percent increase in Taiwan’s foreign reserves.
The central bank’s huge reserves have distorted its decisionmaking processes, the authors wrote.
The monetary authority inevitably has to consider the effects of any interest-rate decisions on the bank’s balance sheet, rather than focusing purely on what would be best for the economy, they wrote.
In response to queries, central bank Deputy Governor Yen Tzung-ta (嚴宗大) said that it would be “more appropriate to respond after reading the whole book.”
The authors lay out what they see as the long-term damage caused to the economy by Perng’s rigid and staunchly defended policies. Under central bank Governor Yang Chin-long (楊金龍), who assumed his role three years ago, the bank has eased its grip on the currency and been more open about its intervention in foreign-exchange markets.
The authors proposed three main areas of reform: strengthening the bank’s independence and oversight of its reserves, improving transparency and accountability and reforming the bank’s decisionmaking process on monetary policy.
The book concludes with the authors saying they hope the central bank will implement their recommended changes, which they predict would gradually improve the problems caused by Taiwan’s monetary policy over the past 20 years.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday held its first board of directors meeting in the US, at which it did not unveil any new US investments despite mounting tariff threats from US President Donald Trump. Trump has threatened to impose 100 percent tariffs on Taiwan-made chips, prompting market speculation that TSMC might consider boosting its chip capacity in the US or ramping up production of advanced chips such as those using a 2-nanometer technology process at its Arizona fabs ahead of schedule. Speculation also swirled that the chipmaker might consider building its own advanced packaging capacity in the US as part
A move by US President Donald Trump to slap a 25 percent tariff on all steel imports is expected to place Taiwan-made steel, which already has a 25 percent tariff, on an equal footing, the Taiwan Steel & Iron Industries Association said yesterday. Speaking with CNA, association chairman Hwang Chien-chih (黃建智) said such an equal footing is expected to boost Taiwan’s competitive edge against other countries in the US market, describing the tariffs as "positive" for Taiwanese steel exporters. On Monday, Trump signed two executive orders imposing the new metal tariffs on imported steel and aluminum with no exceptions and exemptions, effective