Taiwan's central bank issued a statement on the evening of September 28 to clarify a local media report quoting Governor Chin-long Yang's reply to a Legislative Yuan discussion. The central bank denied that Yang had said it is planning to impose currency control on capital outflows in the case of foreign investors remitting massive capital, such as more than US$100 billion, in a short period of time.
The central bank points out that Taiwan enjoys US$549 billion in foreign reserves and US$691.4 billion of foreign currency liquidity, not to mention that Taiwan is a net creditor, with US$280 billion of foreign currency-denominated deposits held by local residents and with net overseas assets of more than US$800 billion. "Taiwan had safely gone through the 1997 Asian Financial Crisis, 2008 global financial tsunami, and 2012 European debt crisis," the statement emphasized that the central bank has always adopted dynamic and effective foreign exchange management measures to maintain the stability of the financial market.
Foreign investors have sold their Taiwan stocks and registered massive capital outflows in response to the fall of international stock markets amid aggressive interest rate hikes by the US Federal Reserve since the beginning of 2022, but the foreign exchange market in Taiwan remains stable. "If further interest-rate hikes of the US are to trigger another wave of capital outflow, we have sufficient capabilities to take actions in response to the volatility of the market," said the central bank.
Taking examples from the history of cross-strait tensions, the central bank statement pointed out that "Taiwan has never imposed foreign currency controls even in the time during Beijing's military threatening in 1995 and in early August of 2022 (after US House of Representative speaker Nancy Pelosi's visit), we trust we are capable to maintain financial market stability through our foreign exchange management measures."
The central bank insisted that when legislators questioned what would the central bank do in the event of cross-strait tension or a significant US interest-rate rise to trigger foreign investors to send massive capital overseas in a short period of time, the Governor's answer was, "We WILL NOT impose foreign control measures."
