Taiwan eyes reserves for loans
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TAIPEI, Taiwan (Reuters) -- Taiwan's central bank has agreed with a cabinet plan to use its fast-growing foreign exchange reserves to provide low-interest loans to businesses, a newspaper reported on Monday.
Taiwan's foreign exchange reserves, the world's third largest, reached a record $202.8 billion at the end of November.
The Chinese-language Economic Daily News quoted central bank governor Perng Fai-nan as saying in an interview that he agreed with the proposal.
But Perng said lending must be included in the government's budget and the economics ministry must detail the criteria for loan approvals.
Central bank officials were not available for comment, but Taiwanese media reported last week that the central bank could provide the program with up to US$10 billion of reserves.
Cabinet officials met last Friday to discuss a plan by Premier Yu Shyi-kun to use the swelling reserves to provide low-interest loans to businesses.
The plan to tap foreign reserves to offer loans comes amid concern that Asia might be starting to diversify its reserve holdings as the U.S. dollar weakens. Total Asian foreign reserves have risen $415 billion, or 28.9 percent, this year.
The build-up, mostly in U.S. dollars, largely reflects intervention by monetary authorities to prevent strong portfolio inflows and rising export receipts from strengthening their currencies.
In September, the IMF warned Asian reserves were excessive and there was a risk that too quick a diversification could unsettle financial markets.
Copyright 2003
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
