For the forty-first consecutive quarter, the United States has retained its position as the leading debtor nation to banks in Taiwan. This long-standing trend, now extending beyond a full decade, underscores the significant financial exposure Taiwanese financial institutions have to the US economy. According to the latest data from Taiwan's central bank, the total amount owed by the US saw a notable increase in the third quarter of this year.
Quarterly Growth in US Exposure
The central bank's report, cited by Focus Taiwan, reveals a clear upward trajectory. The funds Taiwanese banks have committed to the United States grew by a substantial $4.03 billion in the quarter ending September. This marks a 2.07% increase from the figure recorded at the end of June. By the close of the third quarter, the cumulative exposure had reached a staggering $198.896 billion.
Hsieh Jen-chun, the deputy head of the central bank's Department of Financial Inspection, attributed this growth to strategic decisions by Taiwanese banks. He explained that the rise was primarily driven by increased investments in U.S. securities and a higher volume of lending activities directed towards the American market.
Shift in the Rankings: Luxembourg Overtakes China
The latest report highlights a significant reshuffle in the rankings of major debtor nations. Luxembourg has now claimed the position of the second-largest debtor to Taiwan's banking sector, displacing China from the spot. Exposure to the European nation surged by $2.72 billion, bringing the total to $50.77 billion by the end of September.
Deputy Head Hsieh pointed out that this marks the third consecutive quarter of growth for Luxembourg. The increase is linked to Taiwanese banks channeling more funds into trust assets located within the country, which is a major financial hub.
Consequently, China has slipped to third place. Although the financial exposure to China also increased by approximately $1.07 billion to $49.56 billion, it was insufficient to maintain its former rank against Luxembourg's faster growth. Hsieh noted that exposure to China has consistently remained within the $40 billion to $50 billion band. He cited prevailing "concerns about that country's economic outlook" and a sense of "caution over Taiwan's Financial Supervisory Commission restrictions on lending and investments in China" as key factors influencing this cautious stance.
Overall Growth and Other Major Debtors
The total international claims held by Taiwanese banks, encompassing loans, investments, and deposits, witnessed broad growth. These claims expanded by 3.48% from the previous quarter, reaching a total of $670.8 billion. This expansion was largely fueled by increased lending to the global nonbank private sector.
The list of top debtor nations to Taiwan's banks includes:
- Australia in fourth place with $42.14 billion.
- Japan
- Hong Kong
- The United Kingdom
- Singapore
- France
- Vietnam
Collectively, the top 10 debtor nations account for $496.0 billion. This sum represents a significant 73.95% of all international funds held by Taiwan's banking institutions, highlighting the concentrated nature of their overseas financial engagements.
