Central bank to lure foreign investors with loans

By Amy Su / Staff reporter





The government is expected to announce a new plan on Monday that will allow foreign portfolio investors to apply for NT-dollar loans from local financial institutions by using foreign currencies or foreign securities as guarantees, the central bank said yesterday.

“The move will encourage foreign portfolio investors to borrow NT dollars to invest in the nation’s stock market,” the bank’s Department of Foreign Exchange Deputy Director-General Harry Yen (顏輝煌) told a media briefing.

In May last year, Taiwan expanded the scope of NT dollar loans to foreign investors.

In July last year, the central bank and Taiwan Depository and Clearing Corp (台灣集中保管結算所) worked to further to simplify the procedure for foreign investors’ use of pledged stocks, aiming to raise their investments in Taiwanese equities.

As of the end of last month, three local banks have lent NT-dollar loans to a total of five foreign portfolio investors for stock market investment, totaling more than NT$800 million (US$26.64 million), according to data offered by the central bank.

Yen said relaxing the limitations of collateral would help expand the amount further.

Meanwhile, the central bank yesterday released the latest statistics for the nation’s monetary aggregates, showing that annual growth in the M1B and M2 money supply dropped last month from May, mainly owing to slower growth in bank loans and investments.

M1B, a narrow measure of the amount of money in circulation — including currency and passbook savings deposits — rose 7.46 percent from a year ago, the bank said in its monthly report. That compares with a 8.14 percent year-on-year increase in May.

The broader M2 monetary measurement — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 5.74 percent annually last month, which is also lower than the yearly increase of 5.91 percent in May.

For the first six months of this year, the average annual growth rates of M1B and M2 were 8.68 percent and 5.89 percent, respectively.