Taiwan Cuts Holdings in U.S. Banks: Nation Reportedly Withdraws $35 Billion
TOKYO, Jan. 15 (Tuesday)ÛÓTaiwan, one of the world's largest holders of foreign exchange reserves, has reduced much of its holdings in U.S. commercial banks because of its concerns that a Persian Gulf war could exacerbate recession and bank problems in the United States, according to Taiwanese press reports.</br></br>Some of the island nationÛªs reserves have been moved to accounts at the U.S. Federal Reserve System and some to banks in Europe, Japan and Australia, the reports said.</br></br>In a telephone interview, Samuel Shieh, governor of TaiwanÛªs central bank, said the central bankÛªs actions have involved nothing more than "routineÛ transfers of funds. But Peng Hui Nan, director general of the foreign exchange division, was quoted by the China Times as saying that the central bank had ÛªÛªadjustedÛ its reserves deposited in U.S. bank because of the threat of war and U.S. economic problems.</br></br>Central bank officials reportedly said that of TaiwanÛªs $73 billion in reserves, about $35 billion has been moved from U.S. commercial banks since late 1990, and only small amounts are now being kept in those banks to maintain business relations.</br></br>Such a shift would appear to represent a surprising vote of no confidence in the U.S. financial system.