The Ministry of Finance is open to expanding the NT$500 billion (US$15.38 billion) National Stabilization Fund (NSF) to more effectively counter the effects of negative external factors on the local stock market, Minister of Finance Chuang Tsui-yun (莊翠雲) said yesterday.
A possible expansion could make the fund more effective given a significant rise in market capitalization in the past decade, Chuang said at a meeting of the legislature’s Finance Committee in Taipei.
The ministry would address the issue after Democratic Progressive Party Legislator Kuo Kuo-wen (郭國文) initiates an amendment to the Statute for the Establishment and Administration of the National Financial Stabilization Fund (國家金融安定基金設置及管理條例) that would raise the size of the fund to NT$1 trillion.
Photo: Liao Chen-hui, Taipei Times
Under the statute, the NSF can utilize two sources of funding.
It can borrow from financial institutions, collateralized by stock held by the National Treasury Administration in public and private enterprises, with a ceiling of NT$200 billion.
It can also borrow from the postal deposit system, Postal Life Insurance Fund, Labor Insurance Fund, Labor Pension Fund and Civil Servant Pension Fund, with a ceiling of NT$300 billion.
Kuo has proposed removing the ceilings of the two borrowing sources to allow the NSF flexibility in raising funds to counter turbulence in the market.
The stabilization fund was set up in 2000 to serve as a buffer against unexpected external factors that might disrupt the local stock market.
The market’s value has soared to more than NT$70 trillion from NT$8 trillion in 2000, Kuo said.
When the local stock market encountered headwinds from tariff threats from US President Donald Trump’s administration, the stabilization fund’s committee intervened starting from Tuesday last week, the ninth intervention since its establishment.
The stabilization fund has never used the second borrowing source and the committee’s executive secretary — Deputy Minister of Finance Frank Juan (阮清華) — is careful when managing the fund to support the market and shore up investor confidence, Chuang said.
Chuang said she has closely watched the decline in turnover in the local stock market as many investors stayed on the sidelines amid tariff concerns.
The average combined turnover of the main board and the over-the-counter market shrank 27.4 percent year-on-year to NT$400.4 billion last month, the ministry said.
Tax revenue from securities transactions last month fell 24.6 percent to NT$21.9 billion from a year earlier, the steepest decline in 26 months, ministry data showed.
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