Taipei, Central Bank Governor Yang Chin-long (???) said on Thursday that he sees little chance of a financial crisis being triggered by the coronavirus disease COVID-19, which has been declared a global pandemic by the World Health organization.
Speaking during a hearing at the legislative Financial Committee, Yang said "I think the likelihood of such a financial crisis is slim, judging from the information I have received so far."
Yang made the comments when answering questions from opposition Kuomingtang (KMT) lawmaker Tseng Ming-chung (???), who asked whether a COVID-related financial crisis was possible this year after similar crises in 1998 and 2008.
The remarks came one day after European Central Bank (ECB) President Christine Lagarde reportedly told European Union (EU) leaders that ECB policy makers would look at all policy tools at their meeting this week to provide "super-cheap" funding.
A person familiar with her comments was citied as saying that Lagarde warned EU leaders that "without coordinated action on the coronavirus outbreak Europe would see a scenario that would remind it of the 2008 financial crisis," according to Reuters.
Despite Yang's relative calmness, the central bank pointed out in its business report that as the coronavirus has rapidly spread from China to nearly 100 countries, its impact is expected to exceed that of the severe acute respiratory syndrome (SARS) in 2003 because of China's current importance as a world economic powerhouse.
The report also identifies Italy, Iran, South Korea, Japan, and the United States as the countries most affected by the contagious disease.
China now plays a key role in the global component supply chains, and disruptions in its supply or a slowdown in its demand will definitely create a far greater spill-over effect in the world economy, the report added.
On the same occasion, the central bank chief also said that Taiwan could be named as a currency manipulator in April by the U.S. Department of Treasury if it sticks to past criteria.
On Jan. 13, the U.S. Treasury Department delivered to Congress the semi-annual Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, in which it reviewed and assessed the policies of 20 major trading partners of the U.S.
In the report, China was removed from the category of currency manipulator, though remained on the monitoring list alongside 10 other countries including Germany, Italy, Japan, Singapore and South Korea. Taiwan was not on the list.
Yang, however, noted that Taiwan has met this time the first two of three criteria set by the U.S. for currency manipulation.
According to the semiannual report, the three criteria are as follow:
(1) A significant bilateral trade surplus with the United States of at least US$20 billion over a 12-month period.
(2) A material current account surplus of at least 2 percent of gross domestic product (GDP) over a 12-month period.
(3) Persistent, one-sided intervention with net purchases of foreign currency conducted repeatedly, in at least 6 out of 12 months, and these net purchases total at least 2 percent of an economy's GDP over a 12-month period.
Source: Focus Taiwan News Channel