An unexpected interest rate cut by the People’s Bank of China could increase the risks that Taiwanese financial institutions face operating in China. That was the word from National Chengchi University economist Norman Yin on Monday.
China’s central bank lowered interest rates last Friday. It was the first cut since July of 2012.
Yin said the rate cut allows China to have more capital, but that also means more risks for Taiwan’s financial sector.
“There will be a relative increase in operational risk for Taiwanese financial institutions operating in China," said Ying. "That’s because they will need to have a deeper understanding of the credit and operations of the Chinese businesses with which they are dealing.”
Yin said the monetary easing policies introduced by China and other Asian countries could also postpone Taiwan’s plan to increase interest rates in the second half of next year.
“The global community, including the euro zone, Japan, South Korea and China, has cut interest rates, Ying said. "It’s impossible for Taiwan to do the opposite.”