Taiwan is not likely to replace Hong Kong as Asia’s financial center, as the nation has stricter regulations on foreign currency exchange and lags behind in terms of English proficiency, Financial Supervisory Commission Chairman Wellington Koo (顧立雄) said yesterday.
“If we define an international financial center as a place with complete freedom of capital movement, Taiwan would not be one, as the nation aims to maintain the stability of the exchange rate and has rules and limitations on capital flow,” Koo said on the sidelines of an event in New Taipei City.
Taiwan’s non-English environment has also made it more difficult to attract international banks or financial agencies than Hong Kong or Singapore, he said.
Moreover, there are several fundamental differences between Taiwan and Hong Kong in terms of the taxation system and business environment, he added.
The commission is planning to allow banks to include 16 new products in their wealth management programs to attract wealthy investors, who could park their money in Taiwan, but it still needs to negotiate the matter with the central bank, as eight of the 16 products are related to interest rates or exchange rates, he said.
The commission would make a formal announcement by the end of this year after the two reach a consensus, he added.
The launch of such products would provide an incentive for local firms and international investors to park funds in Taiwan, he said.
Further deregulation of banks’ offshore banking units (OBUs) would provide further incentive, he added.
To limit risks, only banks with stronger financial fundamentals would be allowed to launch the products, which could be sold only to high net worth clients, Koo said last month.
Koo has proposed allowing domestic companies or individuals to open accounts at OBUs to apply for loans denominated in foreign currencies, which also needs approval from the central bank.
Taking out foreign-currency loans at OBUs would not be subject to regulations on the exchange rate, making fund flows more convenient, he said.
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