Taiwan Central Bank: FX Reserves Not for Sovereign Wealth Fund

reservesTaiwan’s central bank, Central Bank of the Republic of China (Taiwan), said it would not be appropriate to transfer the country’s foreign exchange reserves into a sovereign wealth fund. As of June 2014, Taiwan’s foreign exchange reserves stood at US$ 423.45 billion. The central bank stated that 71% of those reserves are allocated to domestic bonds and equities. Taiwan’s foreign exchange reserves are comparable in size to Hong Kong and South Korea. However, the island’s reserves dwarf China’s massive pool of foreign exchange reserves.

Taiwan’s foreign reserves keep growing. A key input is from the use of foreign exchange reserves investment income.

Government officials at the central bank believe that the goals of a sovereign wealth fund greatly differ than the objectives of a country’s foreign exchange reserves.

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