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Central bank makes Y2K liquidity
provisions
The Central Bank of China
(CBC), Taiwan's central bank, has decided to enforce a Y2K
special accommodation program for banks in Taiwan to meet the
demand for increased liquidity caused by the advent of the new
millennium, according to CBC officials.
The officials said that as the lack of sufficient liquidity is
likely to happen amid fears over the possible Y2K bug crisis, the
CBC and the Bank of Taiwan have readied an additional cash
reserve of NT$900 billion (US$28.13 billion) to ease the
liquidity shortfall.
In addition, the central bank has worked out a special
accommodation program lasting three months, starting from Dec. 1
through to the end of next February. Under the program, domestic
banks, foreign banks in Taiwan and the postal savings banking
system may apply to the CBC for emergency loans needed to
maintain their liquidity at normal levels, as long as they have
opened deposit reserve accounts at the central bank.
The interest rate for the emergency loans will be set at the same
level, now standing at 4.875% per annum, for accommodation with
collateral now offered by the central bank. The maximum maturity
for the loans is set at one month and can be extended under CBC
approval. Banks seeking such loans from the central bank are
required to provide government bonds, negotiable certificates of
deposits issued by the CBC or other types of securities
recognized by the CBC, as collateral for the loans.
Lee Sheng-yann, director general of the Banking Department under
the CBC, said the central bank will also adjust the credit
position of the local banking system through open market
operations during the three-month period. He called for local
people not to withdraw a massive amount of cash before the new
year, so that they don't have to run the risk of having their
money lost, stolen or robbed.
Monday, December 6, 1999
Source: Taiwan Headlines