From the Pacific Exchange Blog
A more volatile exchange rate and dampened growth expectations for the Chinese economy have halted, and in some cases led to reversals in, the renminbi’s path towards becoming an international currency.
A half-year into the Bank of Japan’s experiment with negative interest rates, there are growing signs of unusual market activity in Japan, with yields on even long-term government debt going negative and ever-increasing overseas investment. Amid a breakdown in longstanding financial relationships that previously allowed international investors to hedge currency risk cost effectively, Japanese investors are increasingly funding their overseas portfolios with foreign currency debt to minimize foreign exchange risk.
Taiwan has a large number of banks relative to the size of the domestic market, leading to unhealthy types of competition and low levels of profitability. Authorities are trying to solve the problem by promoting bank mergers and international expansion.
This Asia Focus outlines the history of financial and banking reforms in Taiwan, analyzes problems that developed in the banking sector after liberalization, and evaluates current initiatives by regulators to address those problems.