Taiwan’s RMB deposits have been increasing, posing a large risk to Taiwan’s economy. In the Megabank, RMB deposits in offshore banking units (OBU) are already more than Domestic Banking Units (DBU).
The Central Bank said on Friday that Taiwan holds US$45.8 billion in Chinese bonds, which is the highest of any country Taiwan has invested in. China has become the country where Taiwan has the biggest risk exposure. If China’s economy faces any challenges, it will have a big impact on Taiwan.
Economist Norman Yin suggests that people hedge their risks. "Taiwan has very close economic ties with China," said Yin. "Our economy has many areas that inevitably overlap with China’s. As long as there is closer trade with China, that’s the risk that we will have. I suggest that the industry provide some ways to hedge this risk, so that people and corporations have hedging options."
The Financial Supervisory Commission (FSC) has been keeping an eye on this risk. Some businessmen have suggested that Taiwan increase investment in China, but the FSC said that this won’t happen in the short term.