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Exposure of Taiwan's financial sector to euro debt manageable: premier

2012/06/19 17:28:19

Taipei, June 19 (CNA) Premier Sean Chen said Tuesday that the domestic financial industry's exposure to euro-denominated debt remains manageable, but he pledged that his Cabinet will continue to closely monitor the ongoing debt crisis in the eurozone.

The premier said domestic financial institutions had only limited direct exposure to euro-denominated debt of around NT$23.3 billion (US$780.16 million), accounting for only 0.07 percent of the banks' total assets.

"It seems that any potential negative impact of such exposure is still manageable," Chen said during a meeting of government agencies in the aftermath of Sunday's parliamentary elections in Greece.

The Council for Economic Planning and Development (CEPD) reported on the latest developments in the European debt crisis, while representatives of Taiwan's central bank and the Financial Supervisory Commission reported on measures to stabilize the country's finances.

At the same meeting, the Ministry of Economic Affairs presented possible mid- and long-term economic stimulus measures.

Chen said that while the New Democracy Party, which backs the bailout plan Greece negotiated with Europe, won the most seats in the Greek vote, the party's leader Antonis Samaras still faced the challenge of forming a coalition Cabinet.

Aside from Greece, Spain and Italy are also facing serious financial predicaments, the premier cautioned, and trends in those countries along with the current G20 meeting and the next meeting of European Union financial ministers must be closely watched in the near future.

Chen expected the European debt crisis to reach its peak in the latter part of the year, and he pledged that his Cabinet "will continue to closely watch the financial situation in the eurozone."

He also noted that the slow pace of the economic recovery in the United States was not strong enough to stimulate the global economy, creating a challenging environment for Taiwan's economy.

"The Cabinet will have to adopt a cautious attitude toward the global economic situation and the domestic economy," the premier said.

Chen asked the Financial Supervisory Commission to promote timely measures to stabilize the financial situation and stock market, and he asked domestic institutions to solidify their ability to cope with risk.

The premier also asked the Central Bank of the Republic of China (Taiwan) to adopt appropriate currency policies and maintain order in the foreign exchange market to keep the Taiwan dollar's exchange rate stable.

CBC Governor Perng Fai-nan said the bank would ensure that there will be enough liquidity in the market.

Chen also asked the Public Construction Commission to invite related agencies to discuss how to channel substantial idle funds in private hands to public construction projects.

(By Hsieh Chia-chen and Lilian Wu)