Taiwan's Capital Controls: An Investigative Survey

• Main Authors: Tsering Namgyal, 慈仁南迦
• Other Authors: Lin-lin Ku
• Format: Others
• Language: en_US
• Published: 2001
• Online Access: http://ndltd.ncl.edu.tw/handle/24145453339303160570

碩士 === 國立臺灣大學 === 新聞研究所 === 89 === The consensus view is that the East Asian Financial Crisis was initially triggered by high levels of trade deficit, massive foreign debt and double-digit non-performing loan ratios at regional banks. Many believe the global capital did play an important role in aggravating the crisis. Fortunately, Taiwan has been slow to open its financial markets — particularly its capital account — which means that even if currency and stock market speculators were unimpressed by its economy, there was not much they could do about it. Taiwan’s currency is convertible, and the central bank says it lets the market forces determine the exchange rate. But it is generally known that the bank has a huge influence on the exchange rate. During the course of the Asian crisis, the bank helped the NT dollar devalue by about 20% to help its competitiveness. International investors made up just 3% of Taiwan’s stock market holdings in 1997 — that figure has now risen to 5.5% -- so they cannot influence the financial markets much, unlike other Asian economies, like Indonesia and Korea, where foreign investors nearly dominate the market. This study will therefore investigate Taiwan’s restrictions on capital mobility and in particular the island’s policy to modulate capital flows into and out of Taiwan, specifically in the context of Taiwan’s overall trend towards financial liberalization.